Japan’s interest rate hike this past week has hit the benchmark index the hardest in eight years. Despite the turmoil, some investors remain confident about the long-term outlook for the country’s stocks.
The Bank of Japan’s decision to raise interest rates to 0.25% on Wednesday sent markets into a frenzy of volatility, with the Topix rising 1.5% on the day before plunging again on Thursday and Friday.
The BOJ’s move, coupled with signals from the U.S. Federal Reserve that it will cut interest rates, strengthened the yen. A weak currency has been a major factor in supporting the shares of Japanese exporters. Still, as the country normalizes after years of negative interest rates, companies’ power to set prices and higher wages for workers will fuel economic growth that will support the market, said investors and analysts at Hang Seng Investment Management, Goldman Sachs Group and T. Rowe Price Group.
