This essay argues that the TSE, dominated by foreign capital, is structurally the easiest market to hedge. By driving yen appreciation via FX futures and shorting Nikkei futures, massive profits are ensured. The recent crash likely resulted from a coordinated operation between Chinese funds and global capital.

February 15, 2016

The article I introduced the day before yesterday in fact revealed that the Tokyo Stock Exchange—namely Japan itself—was once again hedged against.

In other words, the TSE, the market that guarantees the most certain and absolute profits, is one where foreign capital accounts for 70 percent of daily trading volume.
This makes it the most clearly structured and simplest market in the world.

By pushing the yen higher through currency futures and short-selling Nikkei futures, enormous profits can be generated without fail.

Ordinarily, foreign capital hedges in Japan—securing large, reliable profits—while engaging in high-risk, high-return battles in emerging markets that can only be described as shrouded in uncertainty.
They win there as well, and continue to reap extraordinary gains.

Having realized this today, I became convinced of my hypothesis that the recent massive crash of the TSE was not carried out by Chinese funds alone, but was instead a joint operation aligned with the interests of foreign capital.

In connection with this, the next chapter will introduce a superb essay by Masayuki Takayama, worthy of his name, from the lead column “Setsusetsu no Ki” in this month’s issue of the magazine Seiron.

The facts below clearly demonstrate how outstanding the collapse of the TSE was.

In other words, they prove that my hypothesis was largely correct.

(All bold emphasis in the text is mine.)

[DJ – Major Global Stock Market Indices list follows.]