Global funds fall for Japanese equities again

2023-08-07
Summary:

Investor looking to ride crest of Asia boom are not deterred by Japan’s stock market hitting a 33-year high and signs of slowing global growth. Japan’s Nikkei 225 has gained over 23% year-to-date, well ahead of the S&P 500 despite U.S. economic resilience.

Investor looking to ride crest of Asia boom are not deterred by Japan’s stock market hitting a 33-year high and signs of slowing global growth.


Foreign buying of Japanese equities has exceeded that of Chinese peers for the first time since 2017, according to a Goldman Sachs Group Inc. report.


Japan’s Nikkei 225 has gained over 23% year-to-date, well ahead of the S&P 500 despite U.S. economic resilience.

225JPY

Being second only to China in the Asia Pacific region in terms of size, the market has been a lucrative alternative for global investors at a time after Morgan Stanley downgraded China to equal weight from overweight last week.


The ESP growth is far superior to anywhere outside of the U.S., Jonathan Garner from Morgan Stanley. And ‘the market is trading only about 13 times forward PE’, according to the bank’s earning estimates, a 7 PE discount to the S&P 500.


Goldman and Morgan Stanley also agreed that the BOJ’s latest policy adjustment removes an overhang that will pave the way for stocks to rise further.


Global funds snapped up 196 billion yen of Japanese stocks in the week ended July 28, according to official data. They have been buyers in all but one week since the end of March.


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