Macro Research Japan: Attractive upside with a potential tu | FSMOne SG - Research Highlights

Macro Research

Japan: Attractive upside with a potential turnaround in 2H22

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• Japanese equities have had a challenging year but the outlook moving forward has improved. We see a combination of catalysts in 2H22 and an attractive 25% upside potential by Mar-2024.

• The re-opening of borders and a positive turn in the China situation will be significant macro catalysts, setting up for a possible sequential growth rebound for Japan in 2H22.

• Corporate earnings remain supportive given tailwinds from i) strong pricing power, ii) robust sales growth, iii) weak yen boosting foreign income, and iv) earnings strength from the Consumer, Communication Services, and Health Care sectors.

• Valuation multiples have de-rated significantly over the past year and are currently undemanding. We see room for a re-rating given the catalysts and gradually improving investor sentiment.

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: iShares MSCI Japan ETF (NYSE:EWJ), JPMorgan Funds - Japan Equity A (dist) SGD