Shuhei Abe, chief executive officer of Sparx Group Co., Asia’s second-biggest hedge fund, comments on the global stock rout, the strength in the yen and outlook for Japanese markets. Sparx has about 650 billion yen ($8.3 billion) in assets.
Japan’s benchmark Nikkei 225 Stock Average dropped 3.7 percent to 9,299.88 at the 3 p.m. close in Tokyo, sliding the most since March 15. Japanese stocks plunged by the most in more than four months as concern the global economy is stalling triggered an equities rout that drove the Standard & Poor’s 500 Index to its worst slump since 2009.
On the stocks sell-off:
“The sell-off is a reflection of investors’ concerns over global growth. U.S. growth prospects remain uncertain, financial concerns are stemming from Europe, while China’s economy may slow down. On top of that, the aftermath of Japan’s disaster and potential impact on overall growth still remains.
“The outlook for the U.S. remains a concern and it’s not going to get resolved in a day or two. Still, Asia will likely become the leading market going forward, especially looking at the short-term growth prospect.”
On the yen:
The yen yesterday touched 80 to the dollar for the first time since July 12 after the government sold the currency and the Bank of Japan added to monetary stimulus measures. It recently traded at 78.52 yen per dollar.
“The Japanese government has sent a clear message to the market amid this strength in the yen. While the strength in the yen does have an impact on companies that are directly supplying products to consumers, some companies that are in the middle market making capital goods are less affected nowadays.
“There are more Japanese companies with positive earnings surprises than those with downward revisions amid expectations for increased demand for rebuilding after the earthquake. So the pessimism over Japan’s outlook is less than that of the U.S.’s growth prospects now in the market.”
On the outlook for the Japanese market:
“Global risk is of course negative for the Japanese market, in the short term, but the big trend of growth in the long run doesn’t change. The latest catastrophe has become a catalyst to change many Japanese managements’ mindset.”