hi guys welcome to another video so hope
you guys are rocking today so recently we know that there’s a new president in
Japan well not new it’s the same is a Abe okay it’s the new president and also
the old president so today in this video we will talk about the structural
problems happen in Japan in the past three decades
that’s why globally in the past decade two decades and even three
decades I can say most of the countries around the world GDP and economy has
been gone up a lot or even a little bit and I can assure that the Japan there’s
almost zero growth okay so what are the structural problems within Japan and how
has it relate to us because the economy of Japan and also the currency of Japan
would directly relate to our investment and stock markets all over the world so
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ask me questions but please in the end just give me thumbs up and share this
video to your friends so the story starts in the 1980s when the event called
the Plaza Accord that started in Japan and every after that the Japan’s economy
is going downhill until now in the past three decades the economy of Japan is
really really bad because of that so there lead to some kind of structural
problems happen in Japan and happening right now so the first thing is CPI the
inflation as you can see if inflation is flat or you can say is staff Asian so
every dollar that you earn in Japan then the purchasing power would diminish
tomorrow that is really really a big problem so leave to what leaves people
doing business or leave to every people citizen and household having a pretty
much pessimistic career or future in Japan so if you don’t feel good about the
future if you have a company you won’t spend money you won’t raise the salary
so you can see the salaries in Japan has been flat for the past almost 30 years
imagine for whatever average salary you’re getting now or a fresh graduate salary they’re getting now is the exactly the same in 1987 imagine what is
happening what happened okay so if that’s the case the expenses that every
household is making will be limited or even flat so they’re not buying things
they’re not investing the housing market is all flat okay that’s exactly
the problem and also there’s one more structural problem because of the Japan
Japanese culture they are really protective
so anything coming from outside even a products technology to people or
citizens, it’s really really hard to get to Japan so they’re more of the culture
is once they have a job more or less they’re having this job for
a lifetime, of course, this culture is changing a little bit but it’s really
really hard for a foreigner to work in Japan they have nothing to compare to so
the competitiveness is pretty low that’s why for the past decade the market share
of cosmetics and technology has been shared by South Korea and also China
that’s exactly the case Abe notice it so when he ever be the
president in 2012 of Japan he has the new policies he caught it two three
arrows let’s take into that so the main thing is QE or they’re using the money
of the government to buy the bonds buy the Treasury bonds buy the security debts
private stock market so the thing is making the QE or even we call it QQE or
QQQE because he’s been doing many many times until 2016 people are tired of
that because why it works for a while because we see that in 2014 the CPI the
inflation has won almost hit four percent so if the inflation is 4% the
housing market will be more than that so usually, the inflation rate is 2 to 3%
right so the average growth of housing market is around 5 to 6% so it’s pretty
good right but when the inflation is high usually people will invest in
housing market or inventing the stock or invest in something that will grow because
the purchasing power is really bad right but the thing is when the inflation is
high the citizens of Japan businessmen in Japan they do nothing
that looks really weird so that is the culture because they still not feeling
good or bright about the future of Japan that’s exactly the case
what Abe is doing what Abe did oh he’s doing now is really right on track is
about earning money it’s about the economy but how he talks
how he is presenting himself is pretty bad so people do not trust him anymore
that is the fact that he’s doing business but people do not trusting him for
example for many times that the policy is not doing it correctly and saying
something that he wasn’t supposed to say something like they have a military
which call a defense military so he’s proposed to change it to attack both so
people in Japan will really against it they say that the military is to for
protection is not to fight but in economy rights just like Donald Trump
they are doing something to gain up the army and military that is exactly how a
country has firing power but it’s something that they will not talk on TV
and in the shows but it’s directly correlated to their power and to their
military size so he’s doing something right but not something that Japanese
will like he also had another crisis because of the population problem so we
can see there’s a population in Japan of male and female so as you can see the
age range that most people in Japan is about 40 years old and below seventeen
years, the highest percentage is 65 to 69 years old so people in Japan either
they are retired or going to retire so as you can see the teenagers and younger
people, there’s more hours and more labor hours they’re really really shrinking
as you can see the worst is zero to four years old it’s almost close to nothing
only two percent of Japan so that means if he is not doing something right or
he’s not doing something now the bad economy of Japan would continue for at
least two decades so he is doing something right he’s asking Japanese to
have more children but again if you don’t feel right about the future again
they will not have kids right so he’s doing something else he has loss
big time for the immigration policy is really a historical record
attempt so he is doing that and by the time in 2016 the immigration has speed
up to 150,000 people so compared to the shrinking population Japan of 300,000
people per year is at least filling in and a half of this problem but again
also because the population is shrinking imagine why the housing market
the price will go up right because the demand is declining and the supplies is still there the housing market will not go up at all, so that is exactly what he’s
doing right now in his attempting but if you’re a Japanese will you agree to that
no right because you’re asking foreigners to come into Japan and take away my market
share take away my job and take away my salary right that is exactly the
conflict and the dilemma that Abe has to face right now but he’s doing something
right so right now we know that he’s the new president of the Japan not that he’s
strong is because his component is really weak and also he’s purposely reelected
himself one year before the deadline so before people are ready
he said let’s go do the election just something like Theresa May but Theresa
May has sort of fail but he’s really big time success okay so now the new policies
let’s see if he’s doing it right and if this doing right the economy of Japan
or 2019 would be doing really good and just like before we know that the three
arrows are launched in 2012 and the economy turns really good in 2014 but
the stock market has gone up the most for 80 percent Japanese stock market
it’s 2013 and because also the currency is really cheap and the investing cost is
pretty low so that leads to 2015 a big boom in the global stock market so that is
directly what will impact our investment so recently he has mentioned that he will
take bold measure to speed up the economy of Japan again so including an
18 billion u.s. dollar to put in the economy such as focusing on education
and also the aging and the elderly care problem so why does he doing some policy
of elderly because he’s just a businessman right so in the end he’s not
doing something for no purpose because every year around hundred thousand
people per year they’ve quit their job just to take care of the elderly
because they have no money to hire anyone, so they have to do it themselves
so they have less participation rate of people working in Japan right so that is
a big problem so if they have the more productive elderly caring proposal of
policies so those people may not quit their job and that’s again more people
work more money and they were more chance spending in investing in housing
market that is a cycle than a cycle that he has to break and also he’s going to
launch gambling industry in Japan which is again people dislike it but again in
economy wise it’s the correct way to do but again I against gambling but that’s
really about business the third thing again they are raising the
consuming tax from 5% to 8% to now 10% so we wouldn’t harm the Japanese no
because they are not buying anything right just people going to Japan and spare
money and now spending money I will text you more and also before you leave I will tax you again and also within you come and before you leave you go gamble again and I also profit again so that is his plan and again is right but is somehow not
right to the citizen and Japanese and something is not ethical but it’s not
something that we should measure is something that Abe has to do his
homework in order to persuade the citizen to do the same because after all
he’s tried to help the economy in the inflation has one gone up to almost four
percent but it didn’t last because people still did not trust Abe that is
the key what he’s going to do so let me prove that how policies in Japan and the
currency in Japan will directly affect the stock market so I used the special
code for this homework is called CASHF is somehow like the Japanese policy and
the Japanese currency so we have the dependent variables of S&P 500 Heng Sang English Hong Kong and Japanese Nikki 225 index and also DJI and as well as the Germany DAX
index so there are the examples so if you can see a positive correlation that
means they’re correlated the if you can see a 0.3 to 0.5 that is highly correlated
so as you can see the NKY is the Nikki index is 0.6 is it highest so we know
that right the Japanese currency and policy would directly influence the investing cost so people will invest in
the Japanese market so we know that but if that 0.6 imagine S&P 500 and
DJX they are 0.533 and 0.53 it’s really highly corrected
right so again we prove that the policy and what he is talking weekly would
directly related to the stock market in even the housing market in general in
the economy so we have something that we have to invest so, of course, you can open
the chart you can do homework for your countries but let’s now talk about the
Nikki 225 index this recently is broken the new high again so right
now it’s around 22000 points and now we see that as long as it
doesn’t break below the 21000 level we do not have to sell
this index so this index technically is that technically and fundamental is pretty good so the
first little target we can set 22600 points and if he is doing something correctly the key is if he can persuade the citizens and
people really started trusting him and the stock market will go before the
economy turns good okay it’s always leading right the stock market is always
leading then 22600 is really really only the first
target so how should we invest in this first of all, as we can see other stock
markets are highly correlated with the Japanese stock market and currency but
if you want to directly invest in stock market you can invest in the ETF’s
so in the chart, you can see there are 2 biggest highest volume turnovers of the ETF
so that the liquidity of the ETF will be really good so the correlation
of the ETF against the Japanese index will be the highest so as you can see
the first one is EWJ the second one TXJ that’s not leverage that’s
one-to-one ratio but as you can see the highest volume is the DXJ but the ETF
that has the highest correlation is EWJ so given the volume is the second-highest
but the volume is still too low but the correlation is extremely
high it’s around 0.8 2 0.9 it’s really really highly correlated so you do not
want to invest in an ETF then is not correlated with the index that you want
to invest and in the end, you do the right homework but the result for short
that is something that we avoid so the DXJ is what I suggest if you want to
invest in Japan so that’s basically my update this video is something that to
prove that Japanese and Abe what he’s talking weekly will directly influence
the economy housing market in the stock market in the index and also given that
you’re not investing at all no problem so right now after this video you are
more in your brain so if you start a conversation with your friends it
becomes pretty cool right so two main purposes so hopefully give it
thumbs up and share this video to your friends and I know this is a bit
difficult so please add it to watch later so you can watch later and jot
notes again so I will continue doing it as long as you like this video so I will
continue doing it because our purpose is investing made easy I’ll see you next
time goodbye

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