Strategists at Morgan Stanley and Goldman Sachs believe the Bank of Japan's adjustment to yield curve control (YCC) provides clarity and will support further gains in Japanese stocks。

Last Friday (July 28), the Bank of Japan announced that it would maintain its benchmark interest rate at -0..1%, but said it would slightly adjust its yield curve controls。

At the rate decision meeting, the Bank of Japan kept its 10-year Japanese government bond yield target at around 0%, the central bank said, 0.The 5 per cent ceiling on changes in Treasury yields is only a "reference value" provided by the central bank, rather than a "hard limit," with the goal of flexible control of benchmark yields.。

The unexpected action of the Bank of Japan has allowed many analysts to see investment opportunities.。

Goldman Sachs analyst Bruce Kirk and Kazunori Tatebe said the "BOJ hangover" appeared to have been removed and investors could expand their interest in various sectors while selectively increasing the weighting of large-cap stocks.。They argued that "the combination of a stabilising yen and improved momentum in corporate governance reforms may encourage more inflows of foreign investors."。"

Coincidentally, several Morgan Stanley strategists, including Daniel Blake, agreed that the Bank of Japan had succeeded in increasing policy flexibility without signaling a tightening cycle and that the opportunities were "clearer now."。

On Monday (July 31), Japan's TOPX Index (TOPX) rose 1.7%, extending this year's gains to around 22%, underscoring the market's optimism。In addition, the Nikkei 225 is up 27% so far this year, outperforming many markets around the world.。This outperformance is closely linked to signs of stable inflation in Japan and the increase in Japanese stocks by prominent investors such as Warren Buffett (Warren Buffet).。

In the broader market, bank stocks, which are heavily influenced by benchmark interest rates and YCC policies, also attracted the attention of big bank analysts。Bank stocks in Japan saw a wave of gains after the Bank of Japan's policy announcement。Bank shares rose largely driven by sentiment, with optimism that banks' profitability will improve as Japanese interest rates rise。

Today, bank stocks extended gains, but less than the broader market。Morgan Stanley analysts noted that it is unlikely that the Bank of Japan will continue to tighten monetary policy over the next 12 months, and that further gains in bank stocks may be limited.。

It is worth noting that there are also big banks that hold different attitudes towards the Japanese stock market。Unlike the above analyst optimism, Citi analysts are more cautious。Ryota Sakagami, an analyst at Citigroup, believes there is limited room for Japanese stocks to rise and fall, as inflows into Japan are likely to peak in the short term while the U.S. economy remains strong.。