Japan's Topix Set to Beat S&P 500 for First Time in Two Years
Comment of the Day

September 27 2019

Commentary by Eoin Treacy

Japan's Topix Set to Beat S&P 500 for First Time in Two Years

This article by Keiko Ujikane for Bloomberg may be of interest to subscribers. Here is a section:

“Japanese stocks underperformed for a long time and their valuations were left as very cheap,” Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management Ltd. in Tokyo. “A correction in cheaper valuation stocks have occurred globally and Japanese stocks are the most prominent example for that.”

September has been good to the Topix, which is set for its best month since October 2015. Up until late August, the gauge was one of this year’s worst-performers among the 24 developed markets tracked by Bloomberg.

Norihiro Fujito, the chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, says Japan’s market is enjoying a “a typical return reversal.” Foreign investors may be taking profit on U.S. equities, while covering short positions on Japanese shares, he said.

Foreigners net bought 937 billion yen ($8.7 billion) of cash equities and futures in the week ended Sept. 13, according to Japan Exchange Group data. That was the fourth consecutive week of net buying.

Eoin Treacy's view

The Topix Index (2.43%) currently yields more than the S&P500 (1.93%) which is both reflective of the compression in US yields but also the relatively high historical payout by Japanese firms.

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