Strategists say the approach to buy Japanese stocks as well as the yen — could be one for next year, not this year.
As Japanese stocks rose to the highest levels in three decades, strategists at Bank of America forecast the nation’s currency to weaken further from current levels.
While the Bank of Japan’s ultra-dovish monetary policy is a stark contrast to its global peers that have maintained high interest rates, strategists say the approach to buy Japanese stocks as well as the yen — could be one for next year, not this year.
The term “Buy Japan” — used to call on investors to purchase Japanese stocks and the yen — is “premature,” according to rates and equity strategists including Shusuke Yamada and Tony Lin.
The call to buy Japan stocks and the yen may be a “potential 2024 trade,” the strategists said in a Monday note. However, it’s “conditional on confirmation of a virtuous inflation cycle in Japan and the government’s policy to promote domestic capex and inward FDI.”
Inward foreign direct investment refers to investments made by a foreign entity into another country, in this case, Japan. In contrast, outward FDI occurs when a Japanese firm expands its operations to a foreign country.
