Jonathan Garner: Japan’s Equities Continue to Rally

Jonathan Garner: Japan’s Equities Continue to Rally

While Japan's equities have continued to rally, a roster of sector leading companies and a weak Yen could signal this bullish story is only just beginning.


----- Transcript -----

Welcome to Thoughts on the Market. I'm Jonathan Garner, Chief Asia and Emerging Market Equity Strategist at Morgan Stanley. Along with my colleagues bringing you a variety of perspectives, I'll be sharing why Japan Equities could be a key part of the bullish story in Asia this year. It's Thursday, May the 25th at 10 a.m. in New York.


Japan equities have rallied substantially during the current earnings season and we think further gains are increasingly likely. The theme of return on equity improvement, driven by productive CapEx and better balance sheet management, is clearly finding traction with a wide group of international investors. We first introduced this theme in our 2018 Blue Paper on Japan, where we described a journey from laggard to leader, which we felt was starting to take place due to a confluence of structural reforms such as the Corporate Governance Code and Institutional Investor Stewardship Code, as well as changes in company board composition and outside activist investor pressure.


Japan has a formidable roster of world class firms, which we have identified as productivity and innovation leaders in areas such as semiconductor equipment, optical, healthcare, medtech, robotics and traditional heavy industrial automotive, agricultural and commodities trading, specialty chemicals. As well as more recent additions in Internet and E-commerce, many of which sell products far beyond Japan's borders.


For the market overall, listed equities ROE has more than doubled in the last ten years, and it's now set to approach our medium term target of 11 to 12% by 2025. Company buybacks are analyzing at a record pace and total shareholder return, that is the sum of dividends and buybacks, is running at 3.6% of market capitalization.


Yet Japan equities are still trading on only around 13 times forward price to earnings. And Japanese firms have a low cost of capital, given the country's status as a high income sovereign, with membership of the G7, as highlighted by Premier Kishida hosting its recent summit in his home town of Hiroshima.


An additional near-term catalyst for Japan equities is that the yen is tracking significantly weaker year to date at around 135 to the U.S. dollar than company modeling, which was for around 125. Given the export earnings skew of the market, this is a positive.


All in all, Japan equities are set, we think, to more than hold their own versus global peers and be a key part of a bullish story in Asian equities this year.


Thanks for listening. If you enjoyed the show, please leave us a review on Apple Podcasts and recommend Thoughts on the Market to a friend or colleague today.

Avsnitt(1512)

Mike Wilson: How Will the “Phase One” Trade Deal Impact Earnings?

Mike Wilson: How Will the “Phase One” Trade Deal Impact Earnings?

On today's episode, Chief Investment Officer Mike Wilson says the U.S.-China trade deal is a step in the right direction, but the real story is still the corporate profits outlook.

14 Okt 20193min

Andrew Sheets: Is the Dollar Losing It’s Safe Haven Status?

Andrew Sheets: Is the Dollar Losing It’s Safe Haven Status?

On today's episode, Chief Cross-Asset Strategist Andrew Sheets explains how three of the dollar’s most attractive qualities could be shifting right before our eyes.

11 Okt 20192min

Michael Zezas: The Key Variable in U.S.-China Trade Talks

Michael Zezas: The Key Variable in U.S.-China Trade Talks

On today's episode, Head of U.S. Public Policy Michael Zezas says when it comes to trade, movement toward a meaningful compromise will likely come down to one fundamental variable.

9 Okt 20192min

Mike Wilson: An Unsatisfying Market for Bulls and Bears?

Mike Wilson: An Unsatisfying Market for Bulls and Bears?

On today’s episode, Chief Investment Officer Mike Wilson says both bulls and bears were likely a bit frustrated trying to trade last week's sell-off and rally. So what’s the next move for investors?

7 Okt 20193min

Andrew Sheets: The 3 Most Powerful Market Indicators?

Andrew Sheets: The 3 Most Powerful Market Indicators?

On today's episode, Chief Cross-Asset Strategist Andrew Sheets says despite the myriad models used to assess the direction of markets, three simple indicators may be the most valuable.

4 Okt 20193min

Michael Zezas: U.S.-China Trade: The Outlook for Fall

Michael Zezas: U.S.-China Trade: The Outlook for Fall

On today's episode, A number of trade-related events on the fall calendar could mean progress—or an escalation—on the trade impasse. Head of U.S. Public Policy Michael Zezas provides an overview.

2 Okt 20192min

Special Series: U.S. Housing Faces a Generational Turning Point

Special Series: U.S. Housing Faces a Generational Turning Point

On this special episode, Equity Analyst Richard Hill examines the coming seismic shift for investors as Baby Boomers pass the housing baton to Millennials and Generation Z.

1 Okt 20193min

Mike Wilson: Are Markets Rethinking Pricey Growth Stocks?

Mike Wilson: Are Markets Rethinking Pricey Growth Stocks?

On today’s episode, Chief Investment Officer Mike Wilson explains why markets may be having a change of heart on expensive—and sometimes unprofitable—growth stocks.

30 Sep 20193min

Populärt inom Business & ekonomi

badfluence
framgangspodden
varvet
rss-svart-marknad
rss-borsens-finest
uppgang-och-fall
rss-jossan-nina
affarsvarlden
bathina-en-podcast
lastbilspodden
fill-or-kill
borsmorgon
rss-inga-dumma-fragor-om-pengar
24fragor
avanzapodden
rss-kort-lang-analyspodden-fran-di
kapitalet-en-podd-om-ekonomi
rss-dagen-med-di
rss-en-rik-historia
tabberaset