Japan’s efforts to stimulate the economy with aggressive monetary policy has sent the Japanese stock market surging as investors see it as a way to ride inflation.
Below is a chart from Bloomberg BRIEF economist Michael McDonough, which shows that foreigners are buying up Japanese stocks like crazy. In fact, the buying is tightly correlated to fluctuations in the Nikkei 225, the main index for Japanese stocks.
“Year-to-date Japan has seen about $39.7 bn in net foreign institutional equity purchases (up 100% from last year),” tweeted McDonough.
However, hedge funder Kyle Bass warns this is a dangerous game being played.
“I think it’s going to be very disappointing for those who own those equities, and I kind of think they are “macro tourists,”” he said in an interview with CNBC.