In February, we told you that a number of global funds were bullish on Japan. The MSCI Japan (EWJ 70,92 +0,27 +0,38%) has beat the S&P 500 so far this year. Japan has gone from zero to two in a year. For the island nation known for going slow, these last 12 months have been light speed.
Morgan Stanley notes record low unemployment, solid GDP growth, and low interest rates all point to Japanese equities with more upside.
Using data from the last 40 years, an acceleration in wage inflation and nominal GDP growth coupled with an unchanged labor compensation-to-GDP ratio is consistent with at least high single-digit annualized performance from the Topix in each of the next two years.
Morgan Stanley reiterated their bullish stance on an earnings-driven bull market for the Topix (target 1,770), expecting 26.5% year-over-year EPS growth in 2017 and 9.8% growth in 2018. The Topix 100 is now trading under 970.
Morgan Stanley fixed income strategists said on Monday that investors should start to prepare for a 4Q 2017 change in the Bank of Japan’s 10-year yield target. The market has not priced in any shift in policy makers’ long-term yield target yet. Koichi Sugisaki and Hans Redeker of Morgan Stanley think a 50 bips hike for the 10-year could be coming by year’s end. Japan: Still More Upside, Says Morgan Stanley
In February, we told you that a number of global funds were bullish on Japan. The MSCI Japan (EWJ 70,92 +0,27 +0,38%) has beat the S&P 500 so far this year. Japan has gone from zero to two in a year. For the island nation known for going slow, these last 12 months have been light speed.
Morgan Stanley notes record low unemployment, solid GDP growth, and low interest rates all point to Japanese equities with more upside.
Using data from the last 40 years, an acceleration in wage inflation and nominal GDP growth coupled with an unchanged labor compensation-to-GDP ratio is consistent with at least high single-digit annualized performance from the Topix in each of the next two years.
Morgan Stanley reiterated their bullish stance on an earnings-driven bull market for the Topix (target 1,770), expecting 26.5% year-over-year EPS growth in 2017 and 9.8% growth in 2018. The Topix 100 is now trading under 970.
Morgan Stanley fixed income strategists said on Monday that investors should start to prepare for a 4Q 2017 change in the Bank of Japan’s 10-year yield target. The market has not priced in any shift in policy makers’ long-term yield target yet. Koichi Sugisaki and Hans Redeker of Morgan Stanley think a 50 bips hike for the 10-year could be coming by year’s end.