Ongoing recovery & Relatively Dovish BOJ = Long TOPIX

2021年12月26日

As Japan economy continue to recovery from the Delta outbreak, Japanese equities which have relatively low valuation vs other markets (forward P/E of TOPIX is about 14.3x vs MSCI ACWI of 20x) and have more cyclical sectors vs other markets (EU markets also have good cyclical exposures) should benefit from post-COVID recovery or reopening plays. Moreover, the BOJ will maintain easing monetary policy at least until 2023 and the government will keep boosting economy via massive fiscal stimulus. Hence, Japanese stocks TOPIX will offer at least 10% upsides from now easily.

The first target for TOPIX would be this year's high which should be reached within the next 6 months.

2023年5月17日

ノート

Those who entered with some profits could consider gradually take profits. Nonetheless, investors could also let profits run and keep eyes on how the BOJ will react at incoming meeting as well.

At this point, I would think the risk-reward might not be quite compelling for those who consider about entering due to
1) potential turn in the BOJ's monetary policy to become more hawkish in Q3/2023

2) global economic slowdown which could affect Japan's economy as well but domestic economy could be quite resilient from tourisms recovery ...so must be quite selective in stock selections

and 3) lacking of positive factors to drive earnings expectation much higher.

For 2H/2023 and later on, I would expect TOPIX esp. TOPIX large cap. to underperform TOPIX small/mid cap. or even the Mother index.