August 09, 2024 at 12:46AM
Sumitomo Mitsui Trust Asset Management (SuMi TRUST) on Japanese equities – looking for a bounce back after the sharp sell-off:
Japanese equity market dropped sharply in early August on weak US data and yen strength
SuMi TRUST strategist Hiroyuki Ueno sees this as temporary correction
Yen appreciation driven by diverging Fed/BOJ policy expectations
Ueno: Market should return to uptrend as Japanese corporate earnings remain robust
Double-digit earnings growth expected for FY2024-25
Solid demand seen from domestic and foreign investors waiting to enter market
Overall outlook positive as Japan exits deflation cycle and economy normalizes
Key quotes:
“In the short-term, the market may continue to be swayed by foreign exchange rates and the monetary policy of both Japan and the US. However, in the mid to long-term the market should calm and return to its former upward trend because Japanese corporate earnings remain robust and Japan’s economy as a whole has been able to escape its deflationary cycle and continues to normalise”
“Overall, corporate earnings in Japan are robust, and the Japanese economy is exiting its deflationary cycle; these factors will support the market’s return to an upward trend”
The bottom line: Recent volatility presents buying opportunity in Japanese stocks as fundamentals remain strong.
This article was written by Eamonn Sheridan at www.forexlive.com.
