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Politics : Ask Michael Burke

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To: Earlie who wrote (30876)8/11/1998 12:35:00 AM
From: PaperChase  Read Replies (1) of 132070
 
Earlie. In one of your earlier posts or perhaps it was MB's post (which I can't seem to find) you or MB suggested that if Japan raises it's interest rates, then the inflow of Japanese funds into the U.S. stock market will slow. I also understand from one of MB's posts that there isn't an inverse relationship between the Japanese stock market performance and their interest rates because the Japanese have a higher savings rate.

What I can't figure out is how an increase in Japan's interest rates will cause inflows into our stock market to slow. I could see a slowing of their purchase of U.S. T-Bills. However, the wild expectation of Japanese investors in our stock market is to make 20% to 30% on their money and so they probably won't view an increase in their interest rates as a reason to keep their money at home.

What is your view on this?

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