Investors U-turn on Japan after QE jumpstart

Investors and fund buyers are increasingly backing Japanese equities as the country boosts its QE programme, and rotates its national pension fund towards domestic equities.

Japanese stocks soared to a seven-year high at the end of October as the Bank of Japan unveiled a new round of quantitative easing, the timing of which surprised market commentators. The central bank will increase the monetary base to ¥80trn (£454bn) a year, up from a previous target of ¥60trn-¥70trn, in a bid to boost inflation to 2%. Simultaneously, Japan's national pension fund, the $1.2trn Government Pension Investment Fund, cut its government bond holdings and reallocated to equities (see table below).   Managers hope these moves will prove supportive of asset prices in the...