The Nikkei Stock Average on November 16 finished at 17,862.21 yen, which was 194.6 yen(1.1%) higher than that on the previous day. There were two factors of the rise of the Nikkei Stock Average.

1. As the American interest rate rose, the exchange rate fell to the yen against the dollar and the stock price of export related companies rose.
2. As the long-term interest rate in Japan rose, the stock prices of banks rose.

【Asian Shares: Japanese Banks Rise Sharply】
http://www.wsj.com/articles/asian-shares-japanese-banks-rise-sharply-1479265191

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How long will the yen’s depreciation against the dollar continue?

As for the exchange rate, 1 dollar = 110 yen has come into view. However, you should not forget that the next American president Trump might insist on “dollar depreciation”. Actually, Trump tried to insist on “dollar depreciation” in the television debate of the American presidential election. When “the yen appreciates the dollar weak” remarks, I think that the exchange rate will fluctuate to the dollar depreciation against the yen at a stretch.

Mechanism of the yen depreciation against the dollar @ Trump market.

The mechanism of the yen depreciation against the dollar in the Trump market is as follows.

1. Trump politic leads to tax cut & infrastructure investment.
2. As issuance of government bonds in the US is expected, interest rates are rising.
3. Meanwhile, the bank of Japan will continue the zero interest rate policy with the adjustment of the yield curve.
4. The difference of interest rates between the US and Japan will expand.
5. As selling the yen and buying the dollar proceeds, the exchange rate fluctuates to the yen depreciated against the dollar.

Attention is required to how far this mechanism continues. We do not know when Mr. Trump will refer to “dollar depreciation” policy.

The rise of the Nikkei Stock Average is caused by the rise of the mega bank’s stock price.

The trading value of the first section of the Tokyo Stock Exchange is estimated 2.856 trillion yen, which is approaching to 3 trillion yen, which can be said as a standard for large trading. The momentum of the rise of the Nikkei Stock Average is very strong. Especially, the momentum of the stock price rise of the banks is remarkable. In a trading price ranking, the 1st place is Mitsubishi UFJ, the 2nd place is Mitsui Sumitomo, and the 3rd place is Mizuho. It can be said that the stock price rise of the banks pushed up the Nikkei Stock Average.

Caution
The contents of this blog are written based on the personal opinions about Dow Jones industrial average, the Nikkei Stock Average, and the sentiment of short-term investors, medium-term investors, and long-term investors. With respect to the loss caused by investment based on the contents of the blog, I do not take any responsibility.

Thank you,

k-zma

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