Japan 07 (Oct 23 - Dec 26)

[winston]

‘Buy Japan’ narrative may be underway in stocks, BofA says

Increasing signs of optimism over Japanese equities amid strong quarterly earnings and expectations of more guidance hikes in the coming quarters.

A softer yen, amid speculation over the Bank of Japan’s next rate hike, also benefited local exporters.

While overall profits declined in the fiscal first quarter earnings season, U.S. tariff-related headwinds were “not as severe” as markets feared, with the results being viewed as generally solid.

Despite the decline in profit, companies discussed measures to pass higher costs onto prices and adjust their supply chains, making it easier to visualize a path to earnings recovery.

The brokerage noted that Japanese companies provided a largely conservative guidance for the coming quarters, keeping expectations for upward revisions high going into the rest of the fiscal year.

BofA said non-manufacturing sectors were likely to remain in favor for the time being, especially amid increased earnings deterioration in manufacturing and industrial sectors.

BofA sees share buybacks remaining strong in the coming quarters, especially around the fiscal half-year reporting season.

Source: investing.com

https://www.investing.com/news/stock-ma ... s_headline

[winston]

Japan's exports log biggest drop in 4 years as US tariff impacts intensify

by Makiko Yamazaki

Total exports from the world's fourth-largest economy dropped 2.6% year-on-year in July in value terms, the biggest monthly drop since February 2021, when exports fell 4.5%.

Despite the plunge in the value of exports, shipment volumes have so far held up as Japanese exporters have avoided major price hikes.

Exports to the United States in July fell 10.1% from a year earlier, with automobiles slumping 28.4% and automotive components down 17.4%.

The US lowered tariffs to 15% in exchange for a U.S.-bound $550 billion Japanese investment package.

Exports to other regions were also weak. Those to China were down 3.5%, the data showed.

Total imports in July dropped 7.5% from a year earlier, compared with market forecasts for a 10.4% fall.

"As the tariff deal has at least reduced uncertainties, the Bank of Japan is likely to resume rate hikes as early as in October".

Source: Reuters

https://finance.yahoo.com/news/japans-e ... 19358.html

[winston]

Pension fund trims investments

Manages about 10 trillion yen (US$68bil) in assets, exited 10 out of the 27 active funds it invested in.

The move reduced active funds to 8.9% of its assets compared with 13% a year earlier.

Japan’s policymakers are encouraging individuals to shift from savings to riskier investments to help support retirees in one of the world’s fastest-ageing populations, and that drive also applies to the nation’s pension funds that oversee more than 500 trillion yen combined in assets.

And whereas KKR only conducted reviews of funds every five years to decide whether to stay in them or depart, it may shorten that period to a year or two.

Until recently interest rates were constantly falling so bonds that we bought in the past were like savings accounts.

“Now holdings of bonds like the 20-year are weighing on us” due to their previous low yields and long-term risk, pressuring KKR to buy shorter notes.

Source: Bloomberg

https://www.thestar.com.my/business/bus ... nvestments

[winston]

Why Japan May Be the Market That Supercharges Your Portfolio

By Eric Fry

Four major Japanese catalysts

1. Capital Return. Japanese companies have become more devoted to returning capital to shareholders through share buybacks. 

2. New Investors. The Japanese government is incentivizing individual investors to buy stocks in their retirement accounts through the newly revised Nippon Individual Savings Account (NISA). 

3. Mergers and Acquisitions. A growing number of Japanese companies are using their large cash reserves to acquire other companies. 

4. Artificial Intelligence. Many of Japan’s companies are at the forefront of AI adoption. 

A fifth catalyst for Japanese stocks, inflation, is now additionally pushing savers out of cash. Core consumer price increases have accelerated from 2.7% in 2024 to roughly 3.3% this year, making cash and bonds far less appealing. 

Source: Fry's Investment Report

https://investorplace.com/smartmoney/20 ... portfolio/

[behappyalways]

Shigeru Ishiba refuses to step down!
The LDP's top advisor has spoken out, and Taro Aso has urged nearly 20 cabinet members to follow suit in calling for an early presidential election.

石破茂不願下台!自民黨最高顧問表態了 麻生太郎籲"提前總裁選舉"近20名內閣跟進｜非凡財經新聞｜20250904

https://m.youtube.com/watch?v=j9e5WCb--rQ

[behappyalways]

Japan's Prime Minister Ishiba Resigns, Most Likely To Be Replaced With Hard-Line Conservative
https://www.zerohedge.com/markets/japan ... nservative

[behappyalways]

Political Chaos In Japan: LDP Partner Exits Ruling Coalition In Shock Blow To Takaichi, What Happens Next
https://www.zerohedge.com/markets/polit ... at-happens

[winston]

Japan’s leadership drama won’t change the economic storyline

Both Sanae Takaichi and Yuichiro Tamaki would seek to crank spending and cut rates – hardly the reform Japan needs

by William Pesek

If Abe couldn’t make “Abenomics” work in nearly eight years as prime minister from 2012 to 2020, why would Sanae Takaichi and
Yuichiro Tamaki succeed?

Both need to keep Japan’s bond market from tanking as they add to the National Debt.

Markets are betting on a weaker yen and an end to the Bank of Japan’s tightening cycle.

Though Abenomics was weak on increasing competitiveness, innovation or Japan’s stable of game-changing startups, it sure did send the yen tumbling and Nikkei 224 Average stocks skyward.

Odds are, Tamaki would be less hawkish on the world stage than staunchly conservative China critic Takaichi.

Takaichi seems more inclined to double down on a weak yen and increased fiscal stimulus.

China’s massive public investments in industry mean that, even as Tokyo dithers, China is commodifying many sectors in which Japan long thrived: cars, ships, electronics, batteries, robots, semiconductors, petrochemicals, weapons, you name it.

Though Nikkei 225 stocks recently hit all-time highs, the bond market is deeply troubled by Tokyo’s fiscal trajectory. The price for either Takaichi or Tamaki to win power is almost certain to be budget-busting tax cuts.

With a debt-to-gross domestic product ratio of around 260% and Japan’s population shrinking at a record pace, bond shortsellers have government bonds in their sights.

With wage growth stumbling and inflation proving sticky, the Bank of Japan will find it hard to justify a rate hike in the near term.

Source: Asia Times

https://asiatimes.com/2025/10/japans-le ... 340db87eb1

[behappyalways]

The Liberal Democratic Party and the Restoration Party, are about to sign an agreement.
Takashi Ichiro's election as Japanese Prime Minister is almost certain.
The Liberal Democratic Party and the Restoration Party, have established their power.
Takashi Ichiro's election as Japanese Prime Minister is almost certain.

"自民.維新"將簽協議 高市當選日相幾成定局 "自維政權"底定 高市當選日相幾成定局 ｜記者 盧睿鋐│國際焦點20251019│三立新聞台

https://m.youtube.com/watch?v=i2kFnxY9xIY