With the Japanese yen hitting its lowest level in more than six years, analysts say it is time to invest in the Japanese stock market. It is advised to pay attention to large export companies such as Toyota Motor Corp. and Sony Group, which can benefit from the weak yen.
According to the financial investment industry on the 30th, the recent weak yen is an opportunity to invest in the Japanese stock market.
“It’s a great time to invest in Japanese stocks,” said Pyeon Deuk-hyun, an expert at NH Investment & Securities WM Masters. “The Japanese economy has not deteriorated particularly, and corporate performance is expected to grow more than 10% this year.”
Michael Kelly, a manager of Fine Bridge Investment’s composite assets, also said, “The Japanese stock market prefers the weak yen,” adding, “The Japanese stock market has recently performed better than the Japanese yen.”
On the 28th, the yen’s exchange rate against the dollar reached 125 yen, the lowest level in six years and seven months.
I-Sharez Morgan Stanley Capital International (MSCI) and Japan Exchange Traded Fund (ETF) rose 5 percent over the past two weeks due to the yen’s depreciation. Kelly predicted, “The value of the yen could rise further depending on whether it has bottomed out.”
Japan’s Nikkei 225 also jumped 4.41 percent this month. Although the S&P 500 index of the U.S. is slightly lower than that of the S&P 500 index (5.89%), it is more than twice as high as the STOXX European 600 index (1.98%).
Stock prices of large companies with a high proportion of exports stood out. Toyota Motor Corp. rose 4.01 percent this month. Compared to this month’s low, it jumped 23 percent. Nintendo also rose 8.64 percent this month.
The industry expects Japanese exporters to benefit from the weak yen. Barrence explained, “The yen will increase export competitiveness of automobiles or consumer electronics.”
Nomura Securities said on the 29th, “The yen’s depreciation phenomenon is positive for all Japanese companies,” adding, “The yen’s depreciation phenomenon can offset the performance pressure caused by rising oil prices by about 40 percent.”
The Bank of Japan also maintains the view that the weak yen will help the Japanese economy. Bank of Japan Governor Haruhiko Kuroda said on the 25th that he believes the yen will help the Japanese economy as a whole and that he will continue to take measures to boost the economy.
Governor Kuroda explained, “The economic benefits of the weak yen have increased in the past due to changes in the Japanese economic structure, but now the net profits made by companies abroad have increased.”
One of the reasons for optimistic views on the Japanese stock market is that the performance outlook of Japanese companies is good.
According to Factset, a U.S. financial information provider, Japan recorded the highest level in the regional EPS growth consensus. Morgan Stanley Capital International (MSCI) Japan accounted for 15.5%, far exceeding Standard & Poor’s (9.1%) and MSCI Europe (6.2%). Compared to the MSCI emerging market (0.3%), it is overwhelming.
However, some point out that the Japanese stock market may not continue to rise because the yen’s depreciation is short-term.
Moon Nam-joong, a researcher at Daishin Securities, said, “The yen is expected to be temporary due to the impact of the recent dollar flow,” adding, “There is a possibility that the Japanese stock market may not continue due to a short-term rise.”
In fact, it is predicted that the Japanese government will be able to intervene directly in the foreign exchange market for the first time in 24 years as the yen is expected to weaken at around 120 yen per dollar for a long time. The last time Japan’s Finance Ministry bought yen in the foreign exchange market and directly intervened in the exchange rate was in June 1998.