Goldman Sachs Bullish on Japanese Stocks in Spite of Market Pause
Goldman Sachs’ Timothy Moe, co-head of macro research in Asia and chief Asia Pacific regional equity strategist, is optimistic about Japanese stocks despite a recent pullback. Moe believes that the pause in the market is a healthy correction after a strong first quarter performance, and sees potential for further upside momentum. Here are some key points to consider:
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Pause in Japanese Market: Moe views the recent market pullback in Japan as a necessary breather for the market after a strong performance in the first quarter. He believes that the market has stabilized and is poised to regain traction.
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Valuations and Earnings: With valuations slightly below 50 times earnings and expectations of earnings growth above 10% this year, Moe sees Japan as a reasonable investment opportunity. He highlights the bottom-up corporate reform story as a positive factor for investors.
- Potential Risks: Despite the positive outlook, Moe acknowledges that a stronger Japanese yen could pose a risk to the equity market story. He emphasizes the importance of monitoring the Fed’s actions and its impact on the dollar.
Reform Policies in Korea and Indonesia’s Oversold Market
Moe also shares insights on market reforms in Korea and the oversold nature of the Indonesian market. Here’s a breakdown of the key points:
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Korean Market Reforms: Moe is optimistic about corporate reform and improvement in corporate governance in Korea. He notes that despite concerns surrounding specific policies like the short selling ban, there is a positive direction of travel in terms of shareholder protection and reform initiatives.
- Indonesian Market: Moe believes that Indonesia’s market is oversold, attributing the underperformance to macro changes and pressure on the Indonesian rupiah. He sees potential for a snap back in the market as fundamentals remain strong, particularly in the banking sector.
Hot Take: Opportunities in the Asian Markets
In conclusion, while the Asian markets may face challenges such as market pauses and oversold conditions, there are still plenty of opportunities for investors to capitalize on. With a positive outlook on Japanese stocks and potential for market reforms in Korea and Indonesia, the region presents attractive investment prospects for those willing to navigate the market dynamics. Keeping a close eye on macro trends and staying updated on reform policies could help investors make informed decisions in the ever-evolving landscape of Asian equities.
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