Japanese shares soared to a three-decade high on Monday, November 20, 2023, fueled by strong corporate earnings and robust offshore demand, while the Chinese yuan edged higher amid expectations of further easing measures from Beijing’s central bank.
The Nikkei 225 index surged 0.6% to 28,924.09, its highest closing level since January 1990. The broader Topix index gained 0.4% to 1,991.74, its highest finish since March 2000.
The strong performance of Japanese stocks comes as corporate earnings continue to impress. According to data compiled by Refinitiv, the average earnings per share for Japanese companies listed on the TOPIX index are expected to grow by 46.4% in the current fiscal year ending in March 2024.
Offshore demand for Japanese stocks has also been a key driver of the recent rally. According to a recent report by Goldman Sachs, net overseas buying of Japanese stocks reached a record high of ¥1.8 trillion in October.
The Chinese yuan rose 0.1% to 6.9540 per dollar on Monday, as traders awaited further easing measures from the People’s Bank of China (PBOC). The PBOC has been cutting interest rates and injecting liquidity into the banking system in an effort to support the economy, which has been slowing due to COVID-19 lockdowns and a slump in the property sector.
Here is a summary of the key market moves:
Japan:
Nikkei 225 index up 0.6% to 28,924.09, highest closing level since January 1990. Topix index up 0.4% to 1,991.74, highest finish since March 2000.
China:
Yuan up 0.1% to 6.9540 per dollar.
Overall, markets in Asia were mixed on Monday, with investors cautiously optimistic ahead of a key central bank meeting in the United States this week. The Federal Reserve is expected to raise interest rates by 0.50% on Wednesday, but there is some uncertainty about the size and pace of future rate hikes.