Please note: this article is more than one year old. The views of our CIO team may have changed since it was published, and the data on which it was based may have been revised.
In this CIO Viewpoint Equity – Japan: Structural reforms to drive rerating, but range-bound in the near-term – we evaluate the recent macroeconomic developments, central bank stance and progress on corporate reforms. We also highlight how fundamental rerating is driving the long-term positive outlook, but that short-term prospects are clouded by uncertainties.
Key takeaways:
- The BoJ is likely to remain in “wait and watch” mode amid mixed macro signals and the Fed starting its easing cycle.
- Given the government’s recent response to events and the replacement of prime minister Fumio Kishida being underway, the preference may be for stability, not risking a replay of recent volatility.
- Ongoing corporate reforms continue to drive positive rerating for Japanese equites despite JPY pressure.
- However, the short-term outlook for equities may be more of a stable sideways movement rather than continuing to post gains.
