Morgan Stanley On Japanese Equities

Japan has been our favourite equity market all year, a view that felt pretty bad for eight months and then pretty great for three. We think it’ll have a tougher 2018, as the market increasingly focuses on the large gap between financial conditions (extremely easy) and macro data (extremely strong). We think this will drive higher inflation, and lead the BoJ to amend not just YCC, but potentially the pace of equity buying as well. We think this will drive a stronger JPY, which will exacerbate a deceleration in earnings growth. My sense is that a majority of investors are more positive, seeing a combination of attractive valuation and corporate restructuring ultimately prevailing.

11 Dec 2017 - 10:43- EquitiesEconomic Commentary- Source: Morgan Stanley

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