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华尔街投行齐声看涨:2025年日股有望再创新高!

Wall Street investment banks are all bullish: Japanese stocks are expected to reach new highs by 2025!

Zhitong Finance ·  Jan 6 11:46

Stock strategists indicate that with the push from corporate governance reforms and strong earnings, the Japanese stock market is expected to reach a new historical high in 2025. An investigation conducted by institutions shows that after experiencing a rollercoaster market last year, $Nikkei 225 (.N225.JP)$ and $TOPIX (.TOPIX.JP)$ it has broken through peaks not seen in over 30 years, with expectations for these two indices to increase by 7.8% and 8.6% respectively from last year's closing.

Despite facing pressure from potential interest rate hikes by the Bank of Japan and the uncertainty brought about by Trump's election as president, analysts believe that as Japan transitions from a deflationary economy to a growth-oriented one, corporate earnings will improve.

Tomo Kinoshita, the global market strategist for Invesco Asset Management Japan Limited, stated: "In 2025, the strength of the Japanese economy will help drive the Japanese stock market higher. With strong domestic demand being recognized, the performance of the Japanese stock market may surpass that of other Asian markets."

Key changes such as Japanese companies unwinding cross-shareholdings and the rise of shareholder activism have provided a Bullish outlook for the stock market, and the significant interest rate differential between Japan and many other economies may continue to put pressure on the yen, further boosting exporters.

During this summer's preparations for the Japanese Senate vote, there is an increased risk of market volatility. Last October, Japan's ruling coalition lost its majority seats in the election, marking the first time since 2009.

Here are the key themes that market Stocks Analysts are focusing on for Japan in 2025:

Corporate governance and activism.

Shareholder activism is expected to accelerate, focusing on enhancing capital efficiency and increasing shareholder returns, which is seen as a stimulus formergers and acquisitions.activity. According to compiled data, Japan received a record amount of activist shareholder investment in 2024.

Rieko Otsuka, a strategist at MCP Asset Management Japan, indicated that the actions of activist investors could be "one of the factors strengthening the momentum of the Japanese stock market, as people become increasingly aware of the necessity to effectively utilize capital and improve the performance of companies that have underperformed from a shareholder's perspective."

The General Insurance Association of Japan urged its member companies last year to reduce cross-shareholdings and refrain from acquiring new shares.

Non-life insurance companies have intensified their position liquidation in this category, leading to hopes of enhancing shareholder returns through Share Buyback and dividends, which has made the non-life insurance Sector the best-performing sector in the Tokyo Stock Exchange Index in 2024. In 2024, the industry's ROI of 60.3% easily surpassed the Index's 17.7% ROI.

Junichi Inoue, a portfolio manager at Janus Henderson Investors Japan Ltd., stated, "Valuations are already very attractive, and the Index may rise with the growth in EPS. If corporate governance reforms accelerate, valuations could be further re-adjusted."

Interest rates.

In a world where most central banks are easing monetary policy, the Bank of Japan remains an outlier, with economists predicting at least one interest rate hike by 2025. Financial Stocks may continue to perform excellently this year, as rising interest rates boost banks' lending income and benefit from the sale of cross-holdings.

Bruce Kirk and other Goldman Sachs strategists for Japan wrote in a report, "We expect that Japanese financial-related stocks will continue to attract investor interest in 2025. We also expect that the continuing reduction of cross-holdings by large banks and property insurance companies, as well as ongoing self-help measures to boost net asset returns, should support this outstanding performance."

However, the interest rate gap between Japan and the USA may still be significant, and traders have reduced bets on a rebound of the yen, as the Bank of Japan may wait longer before the next interest rate hike. The Bank of Japan may implement an Algo tightening policy, and Japanese government Bonds are also expected to face pressure.

Trump's policies.

With Trump returning to the White House, America's trade policy will become a significant disadvantage for Japanese companies. Concerns are growing over tariff hikes and the tense US-China relations. Japan's total trade volume with China is 334.7 billion dollars, followed by a trade volume with the USA of 230.98 billion dollars.

Despite the uncertain outlook for the Semiconductors and Autos Industries due to Trump's policies, Morgan Stanley's analysis shows that Japanese companies may demonstrate resilience, with more than half of their North American income coming from goods and services produced in the USA.

Nomura Securities wrote in a report that Japan may also maintain its status as an important partner for the USA, and the impact of such tariffs on corporate profits is unlikely to be significant.

Naomi Fink, Chief Global Strategist of Nissay Asset Management, stated: "Due to speculation (along with tariff threats) driving the market, investors' impact perceptions regarding tariffs have become relatively negative, partly due to the uncertainty itself."

She added that for Japan, corporations and households hold a large amount of Cash and are waiting to see, "We will view this temporary decline as a good opportunity to Buy."

Editor/danial

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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