Goldman Sachs Group Inc. boosted its outlook on Japanese shares for the fourth time this year on the Bank of Japan’s “credible commitment” to beat deflation.
Goldman Sachs raised its 12 month Topix (TPX) Index outlook to 1,350 from 1,250. The last time the brokerage raised its Topix forecast was in March. Goldman Sachs also raised its 12 month Nikkei 225 Stock Average estimate to to 16,000 from 15,000, representing an increase of 18 percent from yesterday’s close.
“The new BOJ governor, Haruhiko Kuroda, has stepped out with a bang,” wrote Goldman Sachs strategists led by Kathy Matsui. “While many remain skeptical about the ability of the BOJ to attain the 2 percent inflation target, we believe the most critical point is that the BOJ now believes it can achieve it and will do whatever it can to achieve it.”
The Topix surged 59 percent from mid-November through yesterday as Prime Minister Shinzo Abe and Kuroda pledged to defeat 15 years of deflation. The gauge rose for seven days from April 3, when the BOJ began a meeting that ended with an announcement that the bank will double the monetary base by the end of 2014 by buying government bonds, its boldest round of quantitative easing.
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