Some Japan equity strategists are recommending investors hold off any hunt for bargains until trade tensions cool after the U.S. midterm elections.
A possible decline in protectionist rhetoric once congressional elections end in November may allow investors to focus on Japan¡¯s strong earnings that have been overlooked because of fears of a trade war with the U.S., according to analysts. Japanese stocks have borne the brunt of Asia¡¯s slump because many market participants consider the shares to be cyclical, meaning that global investors tend to sell them first on signs of an economic slump.
¡°We¡¯re bullish on Japanese stocks as they are extremely cheap in valuation relative to other markets,¡± said Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management Ltd. in Tokyo. ¡°Real buying may come into Japanese stocks once the market goes through the midterm earnings releases starting in late October and the U.S. interim elections in early November.¡±
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