http://money.cnn.com/2014/11/07/investing/japan-pension-buying-us-stocks/index.html?iid=H_BN_News
In this article by CNN Money, it explains the recent growth in the U.S stock market as a direct result from the foreign investment by Japan. The Japanese have been looking to, and have, diversified their foreign investment portfolio by more than doubling their international stock portion of the portfolio to 25% from a mere 12%. This has resulted in about a $50 billion to the market for Americans.
Japan has one of the largest pension fund in the world, a whopping $1.1 trillion dollars, and as a result of this, they are now starting to deploy this money into different markets, mainly blue chip stocks with high dividends. All of this is due to Prime Minister Shinzo Abe's efforts to kick start the Japanese economy through stimulus spending known as "Abenomics".
This is why FDI is so important to countries. Without having to really do anything they can get investment and use that money to help the economy grow. It's interesting to see a foreign government invest so heavily in another country because most of the time you see foreign firms do this.
ReplyDeleteObviously, Japan's stocky buying "spree" is good for our economy as it boosts the US stock market. This raises consumer confidence, which in turn promotes spending and higher GDP.
ReplyDeleteIt's good to not only see this stock buying spree help our economy because of the FDI but also to see this renewed confidence in our stock market. I know the U.S. market has always been near the top in the world and that our 2008 recession had some major effects around the world because of its magnitude but I think this massive investment by Japan is definitely a sign that many people think we are in good shape moving forward.
ReplyDeleteThis is great for the U.S. economy. Higher level of saving increases the saving minus investment curve and increases income. Foreign direct investment is very important to our nations and it can have effect on other nations as well. This is good to see for the U.S. economy.
ReplyDeleteTotally agree with everyone else that it is very fortunate for the U.S economy when Japan bought all the U.S. stocks and resulting helping the DOW and the GDP. In the end will also help Japan because by buy all the stock increased the price of the U.S. by a lot and therefore helping their investment by a lot.
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