Thu, Feb 20, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

The case for currency-hedged Japanese stocks

Friday, January 20, 2017

Matthias Knab, Opalesque:

Richard Turnill, BlackRock Global Chief Investment Strategist, writes on Harvest Exchange:

We see a strong case for Japanese stocks on a currency-hedged basis, as this week's chart helps explain. We believe they should disproportionately benefit from global reflation, as well as a potential pickup in Japanese growth ahead. A weak yen is a positive.

A falling yen helps the Japanese equity market in two ways. First, it boosts the earnings of Japanese exporters in local currency terms. This impact can be seen in the chart above, with forward earnings in Japan closely tracking the dollar/yen rate in recent years. Second, it makes Japanese assets cheaper for foreign investors, attracting capital inflows into Japan.

More than just yen weakness

We do see the yen's slide slowing versus the U.S. dollar. Yet the currency is likely to remain weak as zero-anchored Japanese 10-year bond yields encourage local investors to buy higher-yielding foreign bonds. Beyond a weak yen, there are tentative signs local inflation may be picking up, with the biggest month-on-month spike in headline inflation seen in 25 years in October. Our BlackRock Macro GPS economic indicator also implies upside global and Japanese growth surprises could be ahead.

As a result, Japanese earnings estimates are rising......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. PE/VC: Venture debt: Is it a loan? Is it equity? Is it an pportunity?, PE, VC investments in India hit all-time high in 2019[more]

    Venture debt: Is it a loan? Is it equity? Is it an pportunity? From Forbes: Venture Capital is usually the default option for fast-growth startups looking for a cash injection, thanks to our willingness to take risks in return for equity, and with no need to pay anything back - at least

  2. Other Voices: Evolution of shrinking hedge fund fees - what do investors and managers need to know?[more]

    By Don Steinbrugge, Founder and CEO, Agecroft Partners (DonSteinbrugge@agecroftpartners.com): Hedge funds fees remain under extreme pressure across the industry. This strong trend is driven by declining return expectations from investors, inc

  3. COVID-19: Investors track ships, chase rumours to get edge on COVID-19 risks, Coronavirus risk puts the bull run on pause, China was wise to let markets stumble[more]

    Investors track ships, chase rumours to get edge on COVID-19 risks From Reuters: As investors crunch numbers to determine how the coronavirus will hit China's economy, hedge fund manager Nathaniel Polachek has tied much of his outlook to the fate of a ship anchored near Weihai, China.

  4. Bruce Berkowitz is back!, Coatue's new quant fund lost money in the fourth quarter[more]

    Bruce Berkowitz is back! From Institutional Investor: Famed value investor Bruce Berkowitz has hit hard times over the past decade, with big bets on losers like Eddie Lampert's Sears Holdings. In fact, over the past 10 years, his Fairholme Fund's annualized return is only 4.89 percent -

  5. Opalesque Exclusive: Optima A.M. bets on healthcare and biotech innovations with long/short strategy[more]

    B. G., Opalesque Geneva: Optima Asset Management has just launched the Optima Healthcare and Biotechnology strategy, which will be managed by five portfolio managers