market news

Tokyo stocks to rise upwards in 2022 as profits recover from pandemic

Tokyo stocks to rise upwards in 2022 as profits recover from pandemic
Tokyo stocks to rise upwards in 2022 as profits recover from pandemic

The Tokyo stock market is reportedly projected to follow its upward rise into 2022, as growing corporate profitability will largely offset lingering concerns about global inflation and anticipation for a better pandemic scenario.

Market analysts expect the benchmark 225-issue Nikkei Stock Average soaring to 34,000, a high not recorded since March 1990 as well as an 18% increase from its closing position on December 30, the Tokyo Stock Exchange's last trading day of 2021. The downside is projected to remain stable at around 26,000.

In 2021, the Nikkei index rose 4.9% to 28,791.71, marking the third consecutive year of gains but a smaller increase than the previous year's 16% increase.

After limitations enforced to curb the Covid outbreak hampered demand for retail outings and traveling, putting these industries in the hardest market environment among many other sectors, the retail, air and land transport, and service industries are likely to lead revenue growth for Japan Inc.

The tourism sector, for instance, is anticipated to thrive from the resumption of business activities in response to continuous improvement in COVID-19 vaccinations, as the government is likely to restart its Go To Travel subsidy campaign, which was stopped all across the country in December 2020 due to a sharp rise in new Covid-19 cases.

As per Shingo Ide, NLI Research Institute’s chief equity strategist, profits are likely to climb up roughly by 10% in fiscal 2022, and stocks will surge even if the rise is only 5%,

According to the latest projection from the Organization for Economic Cooperation and Development, the world economy would increase 4.5% in 2022, whereas Japan will climb by 3.4%.

After surging beyond 115 yen, its greatest value since March 2017, in late November, the US dollar is expected to propel higher against the Japanese currency to 118 yen.

Nonetheless, additional yen devaluation is unlikely to provide a significant lift to the Tokyo stock market. Analysts note that while a weaker yen enhances exporters' profits overseas when returned, it also raises import prices at a time when materials and energy prices are going up.

Source credit: https://japantoday.com/category/business/focus-profit-recovery-from-pandemic-to-keep-tokyo-stocks-on-uptrend-in-2022

About the author

Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.