Central bank communication mechanism helps Japanese stocks stage a comeback: arbitrage trading unwinding slowly fades, foreign capital speeds up positioning.

According to the Wise Wealth APP, the market volatility caused by the significant rebound of the Japanese yen a year ago is still vivid in memory. At that time, Tokyo and New York stock markets experienced a sharp decline due to arbitrage trading, but now the Japanese stock market has stabilized. Despite experiencing two major pullbacks and a large-scale unwinding of arbitrage trades, global investors who used a strategy of borrowing low-interest yen to invest in high-yield currencies have been impacted. However, the market situation has quietly changed in the twelve months since August 5, 2024.