Asian Stocks Stronger as Japan’s Economy Strengthens

The overall improvement is ramping up confidence throughout various regions of the Pacific.

Close-up of a stock market graph
Close-up of a stock market graph
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Technology stocks led the way as Japan’s economy continues to rebound, and it’s having a direct impact on the Asian stock market. Automotive and technology shares boosted Japan’s Topix index, which enjoyed a 0.8 percent gain. This helped the entire MSCI Asia Pacific Index ride 0.4 percent, and that equaled its longest advance since July 27.

Japan’s economy hit some turbulence at the beginning of the year and after several companies saw their revenue slip and employees tempered in their spending, not certain whether they would receive expected bonuses and other financial rewards, the overall improvement is ramping up confidence throughout various regions of the Pacific.

Not everyone is gaining, though.

Gauges for Shangjai and Shenhen fell back slightly after two days of solid rebounding. At the same time, Hong Kong’s Hang Seng Index saw an increase again, setting up its fourth consecutive increase thanks to Tencent Holding Ltd. Gaining 2.5 percent.

Despite the ongoing trade war between the U.S. and China, which could have lasting repercussions throughout the Asian market, manufacturers are finding more positive signs from the economy, which is helping to boost the markets. On top of that, after a potential trade deal between these two superpowers fell apart last May, there is now dialogue resuming.

As the economy strengthens throughout the Asian markets, it will continue to have a positive impact on businesses of all size.

News on the Trade War Front

New trade tariffs are going into effect August 23, 2018 as these new talks resume and many are tempered but hopeful that a deal can be brokered that will end the turmoil that’s been striking through the heart of many large and medium-sized business that rely, at least to some degree, on exports and imports.

Investors are still showing clear signs of caution and that has tempered strong, sustained gains in the market. Hong Kong and China are leading the way as far as ‘bounce back’ is concerned. However, despite the stronger earnings and production, investors are still wary about the outlook for the future. A lot depends on the trade talks between China and the U.S.

For the most part, investors were anticipating a bounce back, not only in China and Hong Kong, but also in Japan and the current numbers are highlighting this very thing. As the economy strengthens throughout the Asian markets, it will continue to have a positive impact on businesses of all size. Japan’s long-term outlook remains solid and with continued growth and positive signs throughout the Asian stocks, there’s growing optimism among SMEs (small-to-medium size enterprises) throughout Japan.

These are also indicative of the growth in Japan’s GDP last quarter. This is indicating that the entire economy in the country is set for an acceleration heading toward the final months of the calendar year.

Government Bonds Drop

At the same time investors are witnessing positive signs to be optimistic about, Japan’s government bonds took a plunge in value. This highlights a shift in investment patterns, which is a common occurrence when the economy strengthens or declines.

Still, there are lingering concerns about slow wage growth. The future remains strong in Japan, but several factors are still unknown. As for current numbers, the economy is gaining and consumer confidence is elevated, and that portends to a positive outlook for the rest of the year and into the beginning of next year.

Today’s “otsumami” – a bite size snack:

The economy is gaining and consumer confidence is elevated, and that portends to a positive outlook for the rest of the year and into the beginning of next year.

What do you think?

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Written by Joel Devidal

Joel Devidal is a serial entrepreneur and long time fan of Japan, it's unique lifestyle, culture and delicious food . He has grown several profitable businesses during his 20+ years in small business and IT.

He focuses primarily on Japanese online marketing and Internet retail industries, investing and advising startups wanting to enter the Japanese market.

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