Japanese shares have lagged friends to this point this yr, however Credit score Suisse’s Suresh Tantia sees that development reversing quickly.
“Within the developed market house, our favourite market is Japan,” Tantia, senior funding strategist at Credit score Suisse’s Asia-Pacific CIO workplace, advised CNBC’s “Avenue Indicators Asia” on Thursday.
“Japan has massively underperformed the U.S. fairness market this yr regardless of a really robust earnings momentum,” he stated.
As of its Friday shut, Japan’s Nikkei 225 has risen 7.89% for 2021. Compared, the S&P 500 stateside has soared greater than 24% in the identical time interval.
‘Constructing blocks’ in place
The strategist stated a sequence of “constructing blocks” are actually in place for Japan to outperform globally within the coming quarters.
Firstly, Tantia pointed to Japanese Prime Minister Fumio Kishida’s resounding victory in the recent parliamentary election, describing the win as “very constructive for the market” resulting from expectations that the nation’s chief will introduce extra stimulus.
The second issue, in line with the strategist, is valuations.
“In case you take a look at the valuation for the Japanese fairness market, it is buying and selling at a really engaging worth in comparison with some other developed markets,” he stated
Lastly, he pointed to the outlook for the Japanese yen, which has weakened greater than 10% towards the greenback to this point this yr.
“Weaker Japanese yen tends to be constructive for the fairness market and we do anticipate JPY to weaken towards U.S. greenback,” Tantia stated.
