Latest news with #JapanStocks
Reuters
27-05-2025
- Business
- Reuters
Japan's Nikkei seen rising about 5% by year-end, shaking off Trump tariff impact
TOKYO, May 28 (Reuters) - Japan's Nikkei share average (.N225), opens new tab will climb about 5% by end-year as uncertainties over U.S. trade policies that have been holding the index back continue to clear up, although volatility is likely in the near term, according to equity strategists in a Reuters poll. The Nikkei is forecast to trade at 39,600 at the end of December, according to the median estimate of 17 analysts polled between May 15 and 27, up from Tuesday's close of 37,724.11. It was predicted to trade at 40,875 in mid-2026, up 8.35%, and at 42,000 by the end of that year, an 11.33% increase. Three analysts predicted the Nikkei will top July's all-time peak of 42,426.77 by June next year, and two analysts saw it doing so by end-2026. "The current uncertainty around tariffs and U.S. trade policy should be in the rear-view mirror" heading towards the end of this year, said Tony Sycamore, an analyst at IG, who predicts the Nikkei will end December at 40,000 and rise to a record 44,000 a year later. "This will allow the market to revert back to trading the fundamental drivers, such as a weak yen, still-low interest rates and strong corporate earnings." Japanese stocks have swung wildly in the months since reaching that record high, dropping as much as 27% into a bear market by the start of August, mostly tracking sell-offs on Wall Street as worries about the health of the U.S. economy came to a head. They recovered almost as quickly in the run-up to the U.S. presidential election, but then suffered another precipitous tumble of nearly 20%, rocked by Donald Trump's tariff policies. The usually safe-haven yen has likewise been volatile, climbing some 14% from a nearly four-decade trough to the dollar set in July, although it remains cheap by historical standards. A weak currency helps Japan's export-dependent economy by boosting the value of overseas earnings in yen terms. While the Bank of Japan is an outlier among global central banks in raising interest rates, the tightening cycle started from an extremely low base and the pace has been slowed by uncertainties surrounding global trade. For the time being, those uncertainties will keep stock market volatility elevated, said Oxford Economics economist Norihiro Yamaguchi, who predicts only marginal gains for the Nikkei through to end-2026, when it will be at 38,900, making him one of the most bearish forecasters. Just over half of analysts who answered an additional question, or seven of 12, said a correction - usually defined as a decline of 10% or more - was unlikely. The other five said it was likely. They were also divided on whether corporate earnings this year will top the strong batch from 2024, with six predicting marginally higher results and six expecting a marginal decline. Where analysts agree is that more clarity over global trade policy is needed in order to make more confident forecasts. Nomura's head of macro research, Yunosuke Ikeda, said Trump's "shocking" tariff announcement on April 2 forced the firm to flip forecasts for 7% earnings growth to -7%. Following some progress with China and the 90-day pause on the latest levies, that earnings forecast currently stands at -3%. Ikeda expects the Nikkei will rise only modestly to 39,500 by year-end and reach 41,500 a year later. (Other stories from the Reuters Q2 global stock markets poll package)
Bloomberg
19-05-2025
- Business
- Bloomberg
Goldman Sachs Raises Topix Target on Improved Macro Outlook
Goldman Sachs Group Inc. strategists say Japan's Topix stock gauge will benefit from a more benign macro outlook and improved sentiment for risk-taking after a cooling in US-China tariff tensions. Goldman raised the 12-month Topix target level to 2,900 from 2,775, and its assumption for full-year 2025 earnings per share growth to 2% from -1%. The strategists have also raised the electrical appliance and precision sector back to overweight from neutral.
Japan Times
07-05-2025
- Business
- Japan Times
Top-performing Orbis fund doubles holdings in Japanese stocks
A top-performing global equity fund has more than doubled its exposure to Japan this year, making the move just as a strengthening yen boosts the outlook for domestic companies. Japanese stocks made up 24% of the $3 billion Orbis International Equity fund as of end-April, up from just 10% four months earlier. The fund focuses on non-U.S. stocks and beat 99% of peers so far this year with a 16% return, according to data compiled by Bloomberg. It's also ahead of 99% of peers over three and five years. A multiyear slide in the yen made the average investor "very unwilling' to buy shares of domestic Japanese firms, whose profits got crimped by rising import costs, said Bermuda-based manager Graeme Forster. That means those low-margin businesses were priced at depressed valuations in a cheap currency, he said. "So you almost got discount on discount,' Forster said in an April 29 interview. Now, the yen's fortunes have changed. Recent market turmoil drove investors to the currency as a haven asset, pushing its year-to-date gains against the dollar to about 10%. This means foreign investors that put money into shares of Japanese importers will reap two benefits at once: yen gains and improved earnings at these businesses. About 4% of Forster's portfolio is in four Japanese drugstore operators — Tsuruha Holdings, Sundrug, Sugi Holdings and Welcia Holdings. He expects these firms to increasingly pass on rising costs to consumers as the country shakes off years of deflation. Forster also sees the fragmented drugstore sector as poised to benefit from consolidation. In April, retailer Aeon announced a deal to buy Tsuruha, once it merges with rival Welcia. But Orbis, which owns roughly 10% in Tsuruha, plans to vote against the merger during a shareholder meeting later this month, saying the deal undervalues the target. Tsuruha shares have risen 30% this year to slightly below Aeon's proposed acquisition price. Forster's other Japanese stock holdings include beer producer Asahi Group Holdings, which he said is getting increasingly strong at capital management. In addition to buybacks, the beer brewer has pledged to pay out 40% of its net income this year as dividends. He also owns a stake in developer Mitsubishi Estate, drawn to a sector now heeding investor calls to buy back shares, rather than pursue new construction. Inflation is benefiting real estate firms as rents climb, Forster added. "Revenues rise and costs aren't rising commensurately, so you're seeing cash flows going up for the first time in a long time,' he said. Strong gains in European defense and financial stocks have also propelled the fund's outperformance this year. However, Forster said he has pared back some of these winning bets, exiting Germany's Rheinmetall, which has soared more than 150% year-to-date. At the same time, the fund manager retained positions in South Korea's Hanwha Aerospace and Japan's Mitsubishi Heavy Industries as he considers Asia's defense contractors to be relatively cheap. Forster has turned more cautious on European banks for the time being, as the European Central Bank is poised to lower interest rates. Forster prefers businesses that generate steady free cash flow — the likes of Shell and British American Tobacco. He expects equities will struggle to replicate the strong returns seen over the past decade, while tipping global long-term interest rates to climb as the United States rebalances trade. This is a setup that he predicts will suppress asset prices. "If you can get a real 12, 13 or 14% free cash flow yield that is sustainable, that's all you need to do much better than the averages,' he said. "You don't need to figure out what AI is going to do. You don't need to worry too much about what (U.S. President) Donald Trump is going to do. Just find those businesses and own them.'
