Japan’s current market well supported by fundamentals

February 1, 2018

TOKYO - With the Nikkei Index breaching the 24,000 mark, its highest level in 26 years, Japan appears to have put its “lost decade” of growth well behind it. And with the 30,000-point level now well within the Nikkei’s sights, maintaining an underweight bias on Japanese equities may further adversely affect investor portfolios in the years to come, says Nikko Asset Management.

“We believe Japan’s current bull market is well-supported by corporate fundamentals, in particular, strong earnings growth.

“In addition, Japan’s tightest labour market in decades is boosting demand for labour-saving investments, which has been a boon for firms in capital goods sectors.

“At the same time, many companies are offering higher value-added products and services, both domestically and overseas, while continued corporate cost-cutting efforts are raising margins to a record high level.

“These developments are also contributing to a decoupling of Japanese corporate earnings from currency fluctuations.  www.en.nikkoam.com