Two days ago, we discussed how the Japanese yen has plummeted again, and some netizens asked, with the yen plummeting, why is the Japanese stock market soaring?

Those who ask such questions don't even understand the basic logic, including the recent surge in the Indian stock market, which is actually based on the same logic.

In fact, the surge in the Japanese stock market is not really a good thing, and it could even be part of a larger plan by the United States to reap Japan.

How severe has the recent plunge of the yen been?

Let's look at two data points.

The first data point is that on July 2nd, the yen's exchange rate plummeted again, falling to 161.75 at one point, reaching a 38-year low, with a cumulative drop of nearly 15% for the year.

Sumitomo Mitsui Asset Management Company predicted that the yen is likely to fall to 170 this time.

The second data point is that as early as June 24th, data released by the U.S. Commodity Futures Trading Commission showed that the short positions of the yen reached the highest level since 2006 in the week ending June 18th, which was even more fierce than the one in April.

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Regarding the surge in the Japanese stock market, let's also look at two data points.

The first data point is that since the first quarter of 2023, the Nikkei index has been rising all the way, with a year-to-date increase of 30.13% for the whole year of 2023.

In January 2024, after 34 years since February 1990, the Nikkei index broke through the 35,000 mark again.

However, many people did not expect that 35,000 points are far from the end of the Japanese stock market, and there are even bigger surprises ahead.

The second data point is that on July 4th, the Nikkei index approached 41,000 points, setting a new historical high.

During the same period, the Indian stock market also continued to soar, setting a historical high.

On July 3rd, the Indian SENSEX 30 index once rose to 80,074 points during the trading day, breaking through the 80,000-point mark for the first time.

Some people have started to question, and even cheer, looking at the free capitalist world, how fierce their stock market is?

Why is ours stuck at 3,000 points?

Some people say, don't talk about the dollar interest rate hike, the yen plummet, and those things, just take care of our own economy and stock market.

These words are harsh but nothing, the key is that they don't understand why, they boost the morale of others and demoralize our own, which is confusing.

If you don't understand, where does your confidence come from?

First of all, people who ask such questions may subconsciously think that when we say the yen is plummeting, we are saying that the Japanese economy is not good.

Since the Japanese economy is said to be not good, then why is the Japanese stock market soaring?

Of course, theoretically speaking, the exchange rate can affect the stock market, and it is achieved by affecting capital flows.

Generally speaking, when the yen appreciates, the amount of foreign capital converted into yen increases, which means more money comes in, which may drive the stock market to rise; on the contrary, when the yen depreciates, the amount of foreign capital coming in decreases, and the stock market may fall.

However, that's all theoretical.

In fact, the current yen exchange rate and the Japanese stock market are not the same thing at all.

This time, the yen plummet is mainly caused by international short sellers, and what does it have to do with the Japanese stock market?

We cannot help but suspect that some people, as soon as they hear others say that the yen is plummeting, as if they have robbed their money, they rush to defend Japan, how is the stock market rising?

On the other hand, it is a fact that the yen has plummeted recently, the Japanese stock market has soared, and the Indian stock market has also risen.

Why is this?

In fact, there is nothing mysterious about it.

It is the same capital war behind it.

We must first understand a basic principle: both the foreign exchange market and the stock market are capital markets.

Since they are capital markets, they are related to the amount of money.

To put it bluntly, the market will rise when there is more money, and it will fall when there is less money.

If a country does not have foreign capital coming in and plays by itself, then the rise and fall of the stock market depends on the domestic capital flow.

For example, we used to say that when the house price rises, the stock price falls, and vice versa, because the stock market and real estate are the two largest capital reservoirs, affecting each other like the two ends of a scale.

However, if a country's capital flows are completely open, it is not just its own money, but foreign capital that is the largest increase or decrease in capital, or foreign capital is the weight that breaks the balance at both ends of the scale.

Both Japan and India have completely open capital markets.

So, what is the reason for these things?

It is clear at a glance.

The yen exchange rate plummets because of international short sellers, caused by a concentrated short sale of yen in the short term.

The rise in the Japanese stock market is caused by a large amount of foreign capital taking advantage of the plummeting yen exchange rate, and a large-scale entry into the Japanese stock market to buy goods, which is the same as the rumors that many people in our country go to Japan to buy LV.

It's just that American capitalists are rich and powerful, and they are buying Japanese stocks, while people in our country are buying bags in Japan.

In terms of the US dollar capital, it is almost possible to harvest Japanese assets at a 50% discount, why not?

Why is the Indian stock market rising?

First, the Indian rupee exchange rate is also falling, but not as badly as the yen.

The Indian authorities are not afraid of Americans, and they dare to intervene in the exchange rate boldly.

In addition, there is another important factor, some American capitalists and investors expect that the dollar will cut interest rates soon, so they go to Japan and India in advance, and enter the stock market to prepare.

Regarding this point, an expert said a very precise sentence in professional language.

The expert said that Japan and India are the biggest beneficiaries of geopolitics.

When the dollar capital increases the exposure of non-American countries' assets, it will first consider these two markets.

Therefore, the Japanese capital market is completely free, which means opening the door and losing initiative and control.

Although India is also open, it is a bit harder than Japan, so the exchange rate has not fallen so badly.

Perhaps, Japan is really the target that many people say is being harvested by Americans.