Bruce Kirk, chief Japanese stock strategy analyst at Goldman Sachs Group, said that the dollar-yen exchange rate is favorable for overseas investors to buy Japanese stocks. The current exchange rate for the dollar to yen is (1:157). Unless Japanese authorities intervene in the exchange rate, it is a good opportunity to buy on dips, and foreign capital will have the opportunity to invest in Japanese stocks for returns before the yen rises at the end of the year.
Kirk believes that now is the best time to invest in Japanese stocks at relatively low prices, thereby reducing the possibility of declines due to yen depreciation in the future. If the yen starts to strengthen, it can also bring some opportunities to earn foreign exchange gains.
Goldman Sachs stated that although the Japanese stock market has recovered most of its losses since the crash in August, many overseas funds are still on the sidelines. The return of foreign capital has the opportunity to accelerate the TOPIX (Tokyo Stock Exchange Index) to reach historical highs again in 2025.
Goldman Sachs has a 12-month target for the Tokyo Stock Exchange Index of 3,100 points, with a closing price of 2,726.74 points on Monday. Goldman Sachs predicts significant growth potential. Meanwhile, UBS Securities Japan estimates a target of 2,900 points, while JPMorgan Chase & Co. estimates 3,000 points. Goldman Sachs is very optimistic about the Japanese trading market, far surpassing its peers.
Goldman Sachs is confident that foreign capital will return to Japan.
Bruce Kirk believes that the previous political uncertainty and the strong rebound of the U.S. stock market have weakened the motivation for overseas investors to return to the Japanese market. Now that the difficulties have passed, Goldman Sachs sees renewed interest from foreign capital in Japan. Kirk's team estimates that under various backgrounds of stock buybacks, cross-shareholding unraveling, and interest, banks and other financial companies will outperform the market by 2025.
Japanese investment strategists hold different opinions; overseas investors will continue to observe.
Japanese traders indicated that due to market expectations of a slow interest rate cut by the Federal Reserve, the dollar remains strong at 157 yen in Tokyo buying.
Honda Motor has soared more than 20% in the past five days, with the stock price now at 1,512 yen. Investors celebrate the 1.1 trillion yen stock buyback plan, resulting in a wave of celebratory trading. However, Japanese stock traders believe that Honda has attracted retail buying due to the weak yen, increasing their profits from exports, but these short-term gains have limited impact on the overall market.
Kazuo Kamitani, an investment strategist at Nomura Securities, stated that due to the lack of new trading incentives before the Christmas and New Year holidays, overseas investors will continue to observe the market, and Japan's trading market will continue to remain sluggish for a while.
The current dollar-yen exchange rate provides overseas investors with a favorable opportunity to enter the Japanese stock market, but the actual market response needs to consider more variables, such as potential intervention by Japanese government authorities, the overall global economic environment, and market sentiment. Although there are signs that foreign capital may flow back, there remains uncertainty in the market's short-term volatility and long-term forecasts.
This article: Goldman Sachs: Yen depreciation benefits overseas investors to buy Japanese stocks, while Japanese analysts hold different views, first appeared in Chain News ABMedia.
