BoJ issues overheating warning on Tokyo Stock Exchange.

Bank of Japan Alerts on Financial Markets

The Bank of Japan (BoJ) has highlighted increasing risks in the country's financial system, announcing that signs of overheating in the Tokyo Stock Exchange are becoming more pronounced. This situation raises concerns among investors, with significant warnings emerging from BoJ's semi-annual financial system report.

Global Stability at Risk

The bank emphasized that uncertainties in U.S. trade policies could lead to sudden market corrections, posing a threat to global financial stability. In this context, developments in the U.S. and other major economies are closely monitored by investors for their impact on Japan.

Role of Hedge Funds and Final Monitoring

The activity of foreign hedge funds taking leveraged positions in Japanese government bonds (JGB) poses a risk of increasing market volatility. According to BoJ's report, the Nikkei 225 index has risen by approximately 24% since the beginning of the year, confirming the excessive strength in the markets.

Financial Imbalances and Heat Map

When examining BoJ's “heat map” on financial imbalances, it is noteworthy that stock prices are at a “red” risk level. However, despite this, 13 indicators, including credit conditions and corporate loans, remain in the “green” zone, necessitating careful monitoring of the overall financial situation. At this point, investors and analysts should adopt a more cautious approach regarding the market's future.