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Julius Baer Sees Cash Moving In to Japanese Equities

Mark Matthews, head of Asia research at Julius Baer, expects a “mild appreciation” in dollar-yen over the next 12 months and sees money moving into “productive assets,” including Japanese equities, as the country exits deflation. For more on markets, please see: https://www.bloomberg.com/news/articles/2024-03-25/stock-market-today-dow-s-p-live-updates

Bloomberg Television

5 days ago

It's so interesting. The Bank of Japan hikes for the first time in almost 20 years. And the reaction for Japanese equity traders and traders is kind of a collective shrug. Do you think that narrative just continues? Well, I think that's a sign that the BOJ did a very good job of communicating that it didn't cause shock and consternation in the market, and it indicated that it intends to be very, very careful. I would say our own forecast is for 140 on the yen dollar in 12 months from now. So we'
re expecting a mild depreciation. I think that's sort of around five or 6%. But the thing that I'm sure you're very aware of is they have exited deflation. And that is incredibly meaningful in a country where over half of household and corporate balance sheets are basically bank deposits. And they were they were those massive cash hoards that were accumulated through two decades of deflation. But if we're exiting that deflation, which I, I think emphatically, we can say, yes, we are. Some of tha
t money is going to be moving into productive assets, and that would include equities. And the good news in Japan is with over 4000 listed companies, there's there's many, many to choose from. And there are companies in Japan that have been outperformers even versus the S&P over the last 20 years. The topics, of course, looks lousy over that time period, but you can find lots of companies that have had shares that have done well because they have approaches that are in the in the mid-teens.

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