The world’s third largest economy may be struggling to shake off the drag from the sales tax hike that took effect in April, but a weakening yen, improving corporate profits and attractive valuations will likely power gains in equities in the coming months, say strategists.
“We are going to get a combination of value meeting growth – the Japanese market is cheap – so there’s value, and on top of that we are going to get earnings growth,” said Jesper Koll, head of Japanese equity research at JP Morgan Securities Japan.
“[There will be] upward earnings revisions driven by stronger-than-expected top line growth and margin expansion. Corporate Japan has restructured and productivity is just about to explode,” he said.
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