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Michael Mangiafico wrote:
>
> steven poser wrote:
> >
> > Michael - The Nikkei that trades in the US has no night trading hours
> > because there is a contract in Japan and Singapore which is denominated
> > in yen, meaning you have currency risk too.
> >
> > Steve Poser
> Thank you Steven. I find this interesting, becuase the Japanese stock
> market and the Yen are very highly correlated. Have you traded this
> market??? I would like to know, for example, today the Japanese stock
> market was down around 75 bp's but the Yen tanked again. If I were
> short the Nikkei on Simex, what would my bp profit be in dollars???
>
> If the Nikkei is a good short canidate, it is becuase of the falling
> yen. Will shorting the Nikkei on Simex profits be offset by a falling
> yen when converted back into dollars?????
>
> MM
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Michael - The SIMEX contract has initial and secondary margin
requirements of 812,500 and 650,000 yen respectively. Recently, the
relationship between the yen and the Nikkei has been positively
correlated. That is, the stock market falls along with the yen. So, your
profits would be lessened when you convert your yen back into dollars.
Note though that I do not think there has ever been a consisten
relationship between a currency and its underlying equity market. The
Nikkei fell for years as the yen rallied, and has range traded since
mid-1992 while the yen has been weakening since early 1993. The current
reason for a weak currency is: huge debt, super weak economy, interest
rates near zero. Super weak economy does not help the stock market
either for sure.
Of course, as a technical analyst I really do not care too much about
the fundamentals, but that is the story. For the full story though, you
need to know the wild and wonderful politics of Japan too.
As for trading it, no I have never trade these markets. I get precious
little sleep as it is, and if I started trading the Nikkei, I'd never
rest!
Good luck.
Steve
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