Global Stocks Are ‘Melting Up’ This Spring

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We’re seeing newfound optimism on stock exchanges around the world. Notably, we’ve seen market rallies in the eurozone and Japan.

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One reason is that the central banks of the eurozone and Japan are pumping money into the economy. So, investors are left with negative real interest rates. In fact, 20% of government debt in the world has negative yields.

For investors, high dividend stocks are a much more attractive alternative, which has caused money to flow into the stock market.

Not only are European and Japanese stock markets strong, but the Hong Kong market recently surged in what can be best described as a buying panic. The catalyst for the Hong Kong surge was that China opened a trading link between Shanghai and Hong Kong to try to stabilize the overall Chinese economy.

However, the opposite now seems to be happening, as Chinese investors rush to convert their Chinese yuan into Hong Kong dollars. While the Chinese yuan is a relatively stable currency, the ongoing corruption crackdown in China is a cause for concern. As a result, many affluent Chinese citizens are aggressively trying to diversify their wealth, and Hong Kong is clearly the latest winner.

Another thing that has increased stock market inflows is more mergers and acquisitions. Companies that can borrow cheap on the bond market are now aggressively buying other companies to further bolster their underlying sales and earnings.

According to Dealogic, among the deals announced this year, 15 deals have been valued at more than $10 billion. So far this year, over $1 trillion in deals have been announced, so it appears that 2015 is shaping up to be the biggest year ever for in mergers and acquisitions.

Overall, global stock markets are “melting up,” due to low interest rates and the aggressive money pumping from the Bank of Japan and the European Central Bank. This is fueling stock buybacks as well as merger and acquisition activity, which is helping to distract investors from the challenging earnings environment.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


Article printed from InvestorPlace Media, https://investorplace.com/2015/04/hong-kong-surge-shanghai-chinese-eurozone-japan/.

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