RBC holds a constructive view on Japanese equity market, says Japan-US trade deal likely

RBC Wealth Management analysts like Japan stocks. In brief:

  • holds a constructive view on the Japanese equity market
  • thinks a Japan-US trade deal is likely but might not occur until after July’s elections for the upper house of Japan’s legislature (election is July 20)
  • has some reservations though: “Japan’s equity market has priced in tariff cuts, and price action related to this in the auto sector appears too optimistic”
  • a sustainable 2 per cent inflation target seems in sight
  • other supportive factors include renewed investment from friendshoring and onshoring, improving return-on-equity and shareholder returns, resilient domestic demand supported by high savings and wage hikes, inbound tourism, and elevated domestic retail inflows under the revamped Nippon Individual Savings Account scheme

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That 'resilient domestic demand supported by high savings and wage hikes' sounds a bit too optimistic to me.

Nikkei:

This article was written by Eamonn Sheridan at www.forexlive.com.

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