Is Japan's 'Takaichi Trade' making a comeback? Large capital inflows boost the high P/E concept as the Nikkei index breaks through the 54,000-point mark for the first time.

On the 14th, Japan's stock market rose across the board, $Nikkei 225 (.N225.JP)$ up 1.48%, $TOPIX (.TOPIX.JP)$ and up 1.26%. Both major indexes hit record highs, $Nikkei 225 (.N225.JP)$ with one breaking through the 54,000-point mark for the first time and TOPIX reaching a high of 3,644.

According to an electronic version report from Yomiuri Shimbun on the 9th, Sanae Takaichi has begun considering dissolving the House of Representatives at the outset of the regular Diet session scheduled for the 23rd, which is the core driving force behind the surge in Japanese stocks.

The market widely interprets that if a general election is held, the highly popular Takaichi administration is expected to win, which would accelerate the implementation of policies advocated by Takaichi. Driven by this expectation, the 'Takaichi Trade' rally has revived.

Affected by this, the 'Takaichi Concept Stocks', related to the policies promoted by Sanae Takaichi,led the market gains.

Among the top 20 stocks with large inflows, 60% have hit new highs

Among the top 20 stocks favored by major institutional investors in terms of net inflow, on the 13th $Tokyo Electron (8035.JP)$、 $Kawasaki Heavy Industries (7012.JP)$、 $IHI (7013.JP)$、 $Mitsubishi Electric (6503.JP)$、 $Mitsui Kinzoku (5706.JP)$、 $Mitsui (8031.JP)$、 $Mitsubishi UFJ Financial Group (8306.JP)$、 $Sumitomo Metal Mining (5713.JP)$Eight of these stocks hit their highest price since listing.

$Toyota Motor (7203.JP)$/ $Toyota Motor (TM.US)$ 、 $Disco (6146.JP)$、 $Shin-Etsu Chemical (4063.JP)$、 $Lasertec (6920.JP)$Four of these stocks reached their 52-week high. Since the Japanese stock market was also at a high position until the 9th, 'Takichi trading' has once again become one of the factors driving the market upward.

Additionally, due to market concerns that Takichi Sanae’s 'responsible proactive fiscal policy' could lead to fiscal deterioration and increased issuance of government bonds, which might trigger yen depreciation and rising interest rates, export-related sectors such as automotive andthe banking sector have also risen.

Will 'Takichi trading' last for more than a month?

According to reports from various media outlets, there are two main proposed schedules for the upcoming House of Representatives election: announcement on January 27th with voting on February 8th, or announcement on February 3rd with voting on February 15th. The key decision point on whether the general election will be held is expected to come only after Takichi Sanae concludes her summit meetings with South Korean President Lee Jae-myung (visiting Japan on the 13th-14th) and Italian Prime Minister Meloni (visiting Japan on the 15th-17th).

If an election is held, market attention on 'Takichi trading' may continue for about a month; even if not, this topic will remain highly watched at least within this week.

Moreover, if a general election is carried out and the 'Second Takichi Administration' secures a more stable governing foundation than before, 'Takichi trading' could potentially persist.

What are some Japanese equity ETFs available for trading?

For Hong Kong investors who haven't activated Japanese stock trading, there are several Japan-focused ETFs available in the Hong Kong stock market, such as $CSOP Nikkei 225 Daily (2x) Leveraged Product (07262.HK)$ 、 $Hang Seng Japan TOPIX 100 Index ETF (03410.HK)$ 、 $CSOP Nikkei 225 Index ETF (03153.HK)$ 、 $Global X Japan Global Leaders ETF (03150.HK)$ , as well as inverse and leveraged products$CSOP Nikkei 225 Daily (-2x) Inverse Product (07515.HK)$ 。

In the US stock market, relevant Japanese ETFs should not be overlooked, $iShares MSCI Japan ETF (EWJ.US)$ 、 $WisdomTree Japan Hedged Equity ETF (DXJ.US)$ 、 $iShares MSCI Japan Value ETF (EWJV.US)$ and other ETFs are also worth paying attention to.

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