Record-high Nikkei’s rise just getting started on foreign demand

economictimes.indiatimes.com:

Nikkei 225 Stock Average past a record that stood for more than three decades looks set for further advances as foreigners rush back in.

That’s the view of investors and strategists, who are also watching for a potential broadening of equities gains that may take the wider Topix index to an all-time high this year. Fund flow data indicate there’s scope for trillions of yen to return to Japan’s stock market based on figures compiled by Bloomberg.

With the nation’s deflation era now seemingly behind it, Japanese companies showing signs of sustained profit growth and the Tokyo Stock Exchange championing shareholder interests, some analysts project gains of more than 10% for the Nikkei. The Topix also remains about 8% below its 1989 peak.

“We think there are solid fundamental drivers of this rally, and that it can continue for some time, supported by corporate governance reform and improved cash returns to shareholders,” said James Halse, portfolio manager at Platinum Asset Management Ltd. “It seems likely that more global investors will be feeling the pressure to allocate to Japan given the strength of the market’s performance in recent times.”

Historical data suggest more funds may pour in from abroad. In 2013, when former Prime Minster Shinzo Abe’s economic measures known as “Abenomics” got started, Japanese stocks attracted ¥15 trillion ($99.5 billion) in foreign inflows, according to weekly data from the nation’s stock exchanges compiled by Bloomberg.
But overseas investors soon reversed course: their funds