Japan Stocks Are Among the World's Most Attractive: State Street

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#1
Japan Stocks Are Among the World's Most Attractive: State Street

By Chikafumi Hodo  and Shigeki Nozawa
September 26, 2017, 7:39 AM GMT+8 Updated on September 26, 2017, 10:59 AM GMT+8

State Street Corp.’s asset management unit is bullish on stocks, especially those in Japan.

Richard Lacaille, who helps oversee $2.56 trillion in assets as the chief investment officer at State Street Global Advisors, said valuation measures show Japan is one of the most-attractive markets among developed countries. Improving corporate governance, increasing dividends and a weaker currency are helping Japanese companies deliver good earnings consistently, he said in an interview in Tokyo last week.

“We are overweighting equities although we are not ignorant of the risks of euphoria,” Lacaille said. “When we look at the combination of relatively low interest rates and improving earnings growth, that’s a combination that leads us to conclude that we should be risk on.”

More details in https://www.bloomberg.com/news/articles/...attractive
Specuvestor: Asset - Business - Structure.
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#1
Japan Stocks Are Among the World's Most Attractive: State Street

By Chikafumi Hodo  and Shigeki Nozawa
September 26, 2017, 7:39 AM GMT+8 Updated on September 26, 2017, 10:59 AM GMT+8

State Street Corp.’s asset management unit is bullish on stocks, especially those in Japan.

Richard Lacaille, who helps oversee $2.56 trillion in assets as the chief investment officer at State Street Global Advisors, said valuation measures show Japan is one of the most-attractive markets among developed countries. Improving corporate governance, increasing dividends and a weaker currency are helping Japanese companies deliver good earnings consistently, he said in an interview in Tokyo last week.

“We are overweighting equities although we are not ignorant of the risks of euphoria,” Lacaille said. “When we look at the combination of relatively low interest rates and improving earnings growth, that’s a combination that leads us to conclude that we should be risk on.”

More details in https://www.bloomberg.com/news/articles/...attractive
Specuvestor: Asset - Business - Structure.
Reply
#2
I'm actually very bullish Japan towards Olympics 2020. Whole generation don't believe in Japan bull market just like whole generation don't believe in US bear market.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#2
I'm actually very bullish Japan towards Olympics 2020. Whole generation don't believe in Japan bull market just like whole generation don't believe in US bear market.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#3
(26-09-2017, 04:59 PM)specuvestor Wrote: I'm actually very bullish Japan towards Olympics 2020. Whole generation don't believe in Japan bull market just like whole generation don't believe in US bear market.

Are you anticipating a US Bear soon? Not that I disagree with you, considering valuations are high and uncertainties abound. I would be astounded if the bull market can continue for another few years.
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#3
(26-09-2017, 04:59 PM)specuvestor Wrote: I'm actually very bullish Japan towards Olympics 2020. Whole generation don't believe in Japan bull market just like whole generation don't believe in US bear market.

Are you anticipating a US Bear soon? Not that I disagree with you, considering valuations are high and uncertainties abound. I would be astounded if the bull market can continue for another few years.
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#4
Hi Wildreamz

As you know picking tops and bottoms is utmost difficult if not delusionary Smile IMHO the correct psyche should be if we think US is overvalued and if so if there is any better opportunities elsewhere. The trick is that even if US is overvalued and there are not much better opportunities with this global asset inflation, the bull can continue for extended period in a goldilock economy. You know the adage: " The market can be irrational longer than we can be solvent"

Personally for me I think Japan is a better opportunity and minor opportunity cost even if US continue the run.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#4
Hi Wildreamz

As you know picking tops and bottoms is utmost difficult if not delusionary Smile IMHO the correct psyche should be if we think US is overvalued and if so if there is any better opportunities elsewhere. The trick is that even if US is overvalued and there are not much better opportunities with this global asset inflation, the bull can continue for extended period in a goldilock economy. You know the adage: " The market can be irrational longer than we can be solvent"

Personally for me I think Japan is a better opportunity and minor opportunity cost even if US continue the run.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#5
Its all about buying below intrinsic value. If the same bargains, at the same price points exist now in japan that were available in EU, US or even Sing a couple of years ago you should do just fine. In my opinion stocks trading at a 50% discount to conservative IV still exist in Japan. If you take this approach it doesn't matter that the US is overvalued etc. You might face temporary draw downs, but your long run returns should be just fine. Perhaps your margins of safety should be be higher to account for poor capital allocation/governance in Japan.. but my experience is that you can weed out the poor performers yourself.
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#5
Its all about buying below intrinsic value. If the same bargains, at the same price points exist now in japan that were available in EU, US or even Sing a couple of years ago you should do just fine. In my opinion stocks trading at a 50% discount to conservative IV still exist in Japan. If you take this approach it doesn't matter that the US is overvalued etc. You might face temporary draw downs, but your long run returns should be just fine. Perhaps your margins of safety should be be higher to account for poor capital allocation/governance in Japan.. but my experience is that you can weed out the poor performers yourself.
Reply
#6
IMHO Japan economy will be sideways and threading water at best for next 5 to 10 years.


Reasons being:

1) resistance to immigration and developed nation with high cost of living causing stagnating if not decreasing pop., this is massively negative for a consumer based economy.

2) massive debt load due to the last massive crash in the early 1990s and also welfare state system. Bailout of zombie companies in the decades since then also cost the gov. a lot. Even most recently, the gov was prepared to bail out SHARP which was going bankrupt, luckily Foxconn step in and bought it up for USD 3.8billion.

Basically 2) can be tackled by reduction of debt via reforms and cut gov spending welfare etc.. but as usual its political suicide.

1) is a big problem most developed nations . Immigration is probably the only way now to up the pop. With property prices so high, taxes high and cost of living and education high in major cities, no way the younger gen be able to have a home and a few kids to grow the population.

So i do not see any bright future for the economy on the whole in japan. They are just like a cashflow negative company and piling on the debts.

Actually, isn't our local sgx stocks very undervalued as well by global standards?

Better to buy local, could be a boom coming, manufacturing sector has been on a tear recently.. Wink




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Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
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#6
IMHO Japan economy will be sideways and threading water at best for next 5 to 10 years.


Reasons being:

1) resistance to immigration and developed nation with high cost of living causing stagnating if not decreasing pop., this is massively negative for a consumer based economy.

2) massive debt load due to the last massive crash in the early 1990s and also welfare state system. Bailout of zombie companies in the decades since then also cost the gov. a lot. Even most recently, the gov was prepared to bail out SHARP which was going bankrupt, luckily Foxconn step in and bought it up for USD 3.8billion.

Basically 2) can be tackled by reduction of debt via reforms and cut gov spending welfare etc.. but as usual its political suicide.

1) is a big problem most developed nations . Immigration is probably the only way now to up the pop. With property prices so high, taxes high and cost of living and education high in major cities, no way the younger gen be able to have a home and a few kids to grow the population.

So i do not see any bright future for the economy on the whole in japan. They are just like a cashflow negative company and piling on the debts.

Actually, isn't our local sgx stocks very undervalued as well by global standards?

Better to buy local, could be a boom coming, manufacturing sector has been on a tear recently.. Wink




Sent from my SM-T800 using Tapatalk
Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
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#7
The reasons stated is just as valid 5 years ago. The difference is tourism numbers. They targeted 20m tourists by 2020 from originally 6m actual 5 years ago. IIRC they have 24m annual last year.

I think it's a medium term theme as the reasons stated will still be valid after 2020
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
#7
The reasons stated is just as valid 5 years ago. The difference is tourism numbers. They targeted 20m tourists by 2020 from originally 6m actual 5 years ago. IIRC they have 24m annual last year.

I think it's a medium term theme as the reasons stated will still be valid after 2020
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
#8
blueKelah show me 5 companies in Singapore trading at below/close to their net cash position, with high roics and mid-single digit pes. If you can show me five of those, Ill show you my japanese holdings. singapore stocks are still cheap and the governance is better, but the strong run in prices has depressed the future returns.

Commentators about japan are often those who have also not visited the country. Despite the inward nature of the japanese, their country is both well run and civilized.
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#8
blueKelah show me 5 companies in Singapore trading at below/close to their net cash position, with high roics and mid-single digit pes. If you can show me five of those, Ill show you my japanese holdings. singapore stocks are still cheap and the governance is better, but the strong run in prices has depressed the future returns.

Commentators about japan are often those who have also not visited the country. Despite the inward nature of the japanese, their country is both well run and civilized.
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#9
Nice read from Eastspring Investments. Kevin argues that we need to look beyond the macro picture and see the extent to which Japan’s companies had improved their corporate health. Japan is the cheapest among developed markets & he sees another good year ahead.

http://content.eastspring.com/outlook-20...H0QAvD_BwE

Here's what he wrote last year in 2016 just as a reference.
http://www.straitstimes.com/business/inv...nities-lie
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#9
Nice read from Eastspring Investments. Kevin argues that we need to look beyond the macro picture and see the extent to which Japan’s companies had improved their corporate health. Japan is the cheapest among developed markets & he sees another good year ahead.

http://content.eastspring.com/outlook-20...H0QAvD_BwE

Here's what he wrote last year in 2016 just as a reference.
http://www.straitstimes.com/business/inv...nities-lie
Reply
#10
(13-12-2017, 12:04 PM)psslo Wrote: Nice read from Eastspring Investments. Kevin argues that we need to look beyond the macro picture and see the extent to which Japan’s companies had improved their corporate health. Japan is the cheapest among developed markets & he sees another good year ahead.

http://content.eastspring.com/outlook-20...H0QAvD_BwE

Here's what he wrote last year in 2016 just as a reference.
http://www.straitstimes.com/business/inv...nities-lie

Despite the so called improved corporate health, one must not forget this is on the back of massive quantitative easing on the part of BOJ.

IIRC Abe declared another 2 trillion Yen stimulus package for next year before he went for elections few months back and that's probably what they will be doing to keep things afloat for longer. All that liquidity will mainly just flow into stocks and property, inflating asset prices whilst adding debt.

Just like USA, all this talk of low unemploment and economy recovering etc etc.. question is where are the wage gains?

https://www.reuters.com/article/us-japan...SKBN1DE0DD


Kuroda Vows to Stay Course After Speculation Over Tightening
https://www.bloomberg.com/news/articles/...tightening
Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
Reply
#10
(13-12-2017, 12:04 PM)psslo Wrote: Nice read from Eastspring Investments. Kevin argues that we need to look beyond the macro picture and see the extent to which Japan’s companies had improved their corporate health. Japan is the cheapest among developed markets & he sees another good year ahead.

http://content.eastspring.com/outlook-20...H0QAvD_BwE

Here's what he wrote last year in 2016 just as a reference.
http://www.straitstimes.com/business/inv...nities-lie

Despite the so called improved corporate health, one must not forget this is on the back of massive quantitative easing on the part of BOJ.

IIRC Abe declared another 2 trillion Yen stimulus package for next year before he went for elections few months back and that's probably what they will be doing to keep things afloat for longer. All that liquidity will mainly just flow into stocks and property, inflating asset prices whilst adding debt.

Just like USA, all this talk of low unemploment and economy recovering etc etc.. question is where are the wage gains?

https://www.reuters.com/article/us-japan...SKBN1DE0DD


Kuroda Vows to Stay Course After Speculation Over Tightening
https://www.bloomberg.com/news/articles/...tightening
Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
Reply


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