Goldman Sachs Sees Japan Stocks Extending Rally on Wages Japanese stocks will extend a world-beating rally as surging corporate earnings result in higher wages, supporting shares that benefit from domestic spending, according to Goldman Sachs Group Inc. The Topix index will climb to 1,250 in three months, an 8.7 percent gain from yesterday’s close, said Kathy Matsui, chief Japan strategist at the New York-based bank. She expects the gauge to reach 1,300 in six months and 1,400 in a year -- a level unseen since June 2008 -- as Prime Minister Shinzo Abe’s policies spur inflation, putting pressure on companies to boost dividends and salaries. “The next big catalyst for reflation is when profit growth translates into higher incomes,” Matsui said in an interview in Tokyo on Oct. 7. “We have to wait a little while as wages won’t rise overnight. But at the end of the day, one of the key transmission mechanisms of reflation to households is via higher incomes.” Abe’s efforts to reignite growth through monetary easing and fiscal stimulus have mostly benefited investors and large manufacturers as the yen weakened, boosting overseas profits and driving the biggest stock-market rally in four decades. Getting businesses to start distributing their swelling earnings and near-record cash through higher wages will be key to sustaining a rebound in the world’s third-largest economy. Regular salaries excluding overtime and bonuses fell 0.4 percent in August from a year earlier, a 15th straight drop, government data showed on Oct. 1.
Posted on: Wed, 09 Oct 2013 16:42:16 +0000
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