Japan is one of the stocks outside the U.S. that could win as Donald Trump returns to the White House. Many U.S.-traded funds tracking international markets fell on Wednesday as investors mulled the impact of the president-elect’s proposed tariffs on global trade. Trump has previously proposed imposing tariffs of up to 20% on imported goods and a strict 60% tariff on goods from China. However, Japanese stocks rose as the yen weakened and some investors expected U.S. defense partners to benefit most from Trump’s policies. On Wednesday, the Nikkei 225 rose 2.6%, its best one-day gain since September 12. “Japan is the winner,” Goldman Sachs’ Tony Pasquariello wrote this week. He outlined an investment case for the market, saying it was a reflation play as the country’s central bank raised interest rates and would continue to benefit as a U.S. defense partner. What’s more, Pasquarillo writes, Japan is the winner “by eliminating most everything else,” including China, which he says has “the most to lose,” and Europe, which remains “in trouble.” .N225 5D Mountain Nikkei 5-Day Chart Other Wall Street firms agreed that Japanese stocks will outperform now that the U.S. presidential election is over, saying a relief rally will come now that the market has passed a key hurdle. “We believe the market will lean toward a rebound as the year-end approaches,” Bank of America’s Masashi Akutsu wrote on Wednesday. However, Akutsu warned that with few positive earnings surprises in the market, a year-end rebound could be “limited in scope.” “. Bank of America recommends stocks with high beta, high return on equity, and low leverage. Stocks it identified as meeting that criteria include Hitachi Group, electronic equipment maker Keyence and Uniqlo parent Fast Retailing Group. To be sure, it may take some time for foreign investor interest to return after Japan’s August selloff spooked many market participants. Earlier that month, the Nikkei 225 index fell more than 12% in a single day, its worst single-day performance since “Black Monday” in 1987. JPMorgan’s Masanari Takada wrote on Thursday: “Judging from overseas passive inflows, the heavy selling of Japanese stocks by European passive investors has stalled, but even when looking at the situation with U.S. passive investors, there has been a shift towards continued net The inflows are still not happening.” Takada said that even if Japanese stock market risk premiums rise, investors may have to weigh the short-term benefits of Trump’s market against the risks of a possible trade war. The iShares MSCI Japan ETF (EWJ) has underperformed this year, falling more than 8% compared with the S&P 500’s gain of more than 20%. It rose nearly 3% this week.
The one non-U.S. stock market that could win from Trump and how to play it | Global News Avenue
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