I agree and think the Nikkei is still a great play right now. But the Japanese retail investors are definitely not the ones behind the recent rise in the Nikkei. They have all their money overseas trying to get better interest than their crappy savings accounts at Japan Post Bank. Look at the recent re-issue of the Uridashi NZD bonds. Japanese are crazy about chasing down yield wherever they can get it. Up till now it has been institutional money searching the globe for returns. The Nikkei will really start to take off as soon as Japanese retail investors start to put their money in it. As you noted they have trillions stored away. But that might not come until the BOJ leaves ZIRP behind and raises rates (or plans to raise them) OR if higher rates abroad start to come down (not likely anytime soon). Also if you ask the regular people in Japan, they still feel that their economy isn't doing very well and they still have strong memories about the big bubbles that popped in the early nineties. There have been great rewards so far in this trade if you entered at the absolute bottom, but everyone knows that not many can pick a bottom. It's not the end. If you can hang in there for the long term, it's still great risk-reward!
yeah, the retail investors are usually the last to go in. U.S. money managers and hedge funds have been pumping money into Japan since Nikkei at 8000. But to take us to 25,000 and beyond there will be resurgent interest by Japanese retail investors interested in their own equity markets again. Once that happens, it will take us to heights unseen before. But I still think this is the early stages of a bull market for them. As they say, in the beginning everyone is skeptical of the bull market. Market rise of a wall of worries. Then some people start to believe. Then others buy because the market is fundamentally sound. Then people start buying because they were buying before. Then buying begets momentum buying that's when retail investors get in. Then it becomes OBVIOUS to buy. Then your mother calls to ask how to get into the Nikkei markets. I think we are still at stage 1 where people are still skeptical. But it's a good thing. Get it now before the train leaves..
I think the Nikkei will see 15,000 before it sees 17,000. Reasons: 1) Foreign investors have started selling. See http://quote.bloomberg.com/apps/news?pid=10000006&sid=a3pmj1w5p8io&refer=home Japan's Topix Drops on Report of Overseas Investors Selling 2) The Nikkei's momentum has slowed considerably. See the attached chart (actually a chart of EWJ, not the Nikkei). EWJ has fallen below its 50 day simple moving average. On the other hand, there has been increased buying by retail investors in Japan. It's not clear whether their purchases will more than offset the foreign selling. I guess we'll just have to wait and see. As I write this, the Nikkei is at 15952 (actually, it was at 15952 about 20 minutes ago - delayed quote).
EWJ doesn't track Nikkei perfectly. I've studied it. It's a close proxy. But the patterns are slightly different.
Here's an excellent article about the current situation: http://futures.fxstreet.com/Futures...noticia=MTFH42017_2006-02-16_03-13-33_T137742 Excerpts:
Japan's GDP Expands Faster-Than-Forecast on Exports http://quote.bloomberg.com/apps/news?pid=10000006&sid=aAX9kClcYcps&refer=home
Nikkei can't seem to catch a bid on US bull reversal. Looks like 15,000 is possible in the next few weeks.
Yes, that's a little scary. But the long-term pic is still solid. Bound to have a reversal after such a run-up...
I concur with you, and current USD/JPY at 118 or so is helping matters. I've added to my Japan position recently and will add more if it goes to 15000. My time frame is 2-4 years.