JPMorgan Maintains Confidence in Japanese Stocks
JPMorgan analysts remain overweight on Japanese stocks. A recent rebound helped recover much of the losses from August. Fund flow data also shows some foreign buying, adding to the positive sentiment.
Nikkei 225 and TOPIX Bounce Back Strongly
The Nikkei 225 and TOPIX indexes are trading near their highest levels since August 1. Both indexes dropped to 10-month lows in August, entering a bear market. Now, they are over 20% above those lows and approaching record highs set earlier this year.
Year-End Targets Adjusted, But Outlook Remains Positive
JPMorgan has trimmed its year-end price targets for both indexes by about 6%. Despite this, the firm still holds an overweight rating on Japanese stocks, showing optimism.
Investor Activity Shows Mixed Trends
During the week of August 5-9, short-term overseas investors sold Japanese stocks. In contrast, retail investors and long-term foreign traders bought into heavily discounted sectors, indicating bargain hunting.
Strong Earnings Driven by Yen Depreciation
Japanese companies reported strong earnings for the June quarter. A weaker yen played a significant role in this trend. However, the yen strengthened sharply in August as the carry trade unwound. If the yen continues to rise, particularly with potential rate hikes from the Bank of Japan, it could pressure company earnings.
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