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VIEW: J.P.Morgan: An Opportunity To Buy Japanese Equities And JPY

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J.P.Morgan note that "LDP members are at their wits' end; the head of the LDP will be chosen based on popularity among the Japanese people, not based on the political power balance within the LDP."

  • "Suga's announcement to pull out of the LDP leadership race reduced the risk to our already bullish views on Japanese equities. Valuations and elections may incentivise foreign investors to start to buying Japanese equities."
  • "It could be a good opportunity for foreign investors to buy Japanese equities and the Japanese Yen because of the Yen's cheapness in real terms and the Yen's tendency to appreciate under a revolving door of prime ministerial departures."
  • "The combination of a significant inflow to Japanese equities from foreign investors, a lower USD/JPY, and a higher Nikkei 225 index occurred under the Koizumi administration and after the GFC. Expectations for a positive change in Japanese politics, the restart of the global economy, and a narrow yield gap between Japan and the rest of the world are similar to the current situation."
  • "We believe the TOPIX has upside to 2,200 in the coming months."
  • "Implications for the JGB market should be limited while a large economic package is expected."
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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