BlackRock: Multiple favorable factors support maintaining an overweight position in Japanese stocks
BlackRock Investment Institute maintains an overweight position on Japanese stocks, believing that the robust growth of the Japanese economy and corporate reforms are driving strong stock market performance. Despite the yen depreciating to a 34-year low, BII remains optimistic about Japan's long-term potential, asserting that AI will become an important theme in global investment. The report notes that if U.S. employment data does not show weakness, the Federal Reserve may not quickly cut interest rates, affecting market direction. The Japanese stock market has multiple favorable factors and is worth investors' attention
According to the Zhitong Finance APP, the BlackRock Investment Institute (BII) recently released its "Weekly Market Commentary," stating that the Japanese stock market remains one of the preferred choices in global portfolios. The report highlights that Japan's economy is growing steadily, coupled with ongoing corporate reforms that favor shareholders, resulting in strong performance in the Japanese stock market. BII maintains an overweight position on Japanese stocks.
Ben Powell, Chief Investment Strategist for the Middle East and Asia Pacific at BII, expressed optimism about Japan's long-term potential, noting that corporate governance reforms are taking root and rising wages are also contributing to consumer spending. Even with the yen recently depreciating to a 34-year low, it is believed that this will not hinder the upward trend of the Japanese stock market.
The report points out that the Japanese stock market has recently reached new highs, in stark contrast to the U.S. stock market, which is hovering near historical highs. Emerging market stocks have also performed well this year, becoming one of the best-performing assets globally.
Additionally, BII is paying attention to the development of the artificial intelligence theme in global markets, believing that AI will continue to be an important driver of the stock market. Powell added that AI is not only a catalyst for tech stocks but is also gradually penetrating other industries, becoming an important theme for global investment.
Looking ahead to the coming week, BII will closely monitor the release of U.S. employment data. The report indicates that if there is no significant weakness in the U.S. labor market, the Federal Reserve may not cut interest rates as quickly as the market expects. The firm notes that inflation remains sticky, and interest rates may stay elevated for a longer period, which will affect asset allocation and market direction.
Against the backdrop of global interest rate policy divergence, the gap between U.S. and Japanese ten-year government bond yields has widened, becoming one of the main reasons for the yen's weakness. However, BII expects that as the U.S. begins to cut rates, the interest rate differential between the U.S. and Japan will gradually converge, helping the yen stabilize. BlackRock believes that the Japanese stock market has multiple favorable factors, including corporate reforms, wage growth, and policy stability, making it worthy of continued attention and allocation by investors
