Goldman Sachs: Yen depreciation is beneficial for foreign investors to enter the Japanese stock market, Japanese analysts hold different views

Goldman Sachs Group's Chief Japanese Stock Strategist Bruce Kirk said that the water level of the USD/JPY is favorable for overseas investors to buy Japanese stocks. The Exchange Rate of USD/JPY is currently (1:157). Unless the Japanese authorities intervene in the Exchange Rate, it is a good time to buy on dips, and foreign investors will have the opportunity to invest in Japanese stocks before the yen appreciates at the end of the year to gain returns.

Kirk believes that now is the best time to invest in Japanese stocks at a relatively cheap price, thereby reducing the risk of falling due to the depreciation of the yen in the future, and if the yen starts to strengthen, it can also bring some opportunities to earn foreign exchange earnings.

Goldman Sachs says that despite the fact that the Japanese stock market has recovered most of its lost ground since the sharp drop in August, many overseas funds are still waiting and there is a chance that the return of overseas funds will accelerate the TOPIX (Tokyo Stock Price Index) to return to a new historical high in 2025.

Goldman Sachs has a 12-month target for the TOPIX index of 3100 points, which closed at 2726.74 points on Monday, indicating a significant growth potential according to Goldman Sachs. At the same time, UBS Securities Japan predicts a target of 2900 points, while JPMorgan Chase & Co. predicts 3000 points. Goldman Sachs' forecast for the Japanese market is much more optimistic than its peers.

Goldman Sachs is confident that foreign capital will return to Japan.

Bruce Kirk believes that the previous political uncertainty and the strong rebound of the US stock market have weakened the motivation for overseas investors to return to the Japanese market. Now that the difficulties have passed, Goldman Sachs sees a renewed interest from foreign investors in Japan. Kirk's team estimates that banks and other financial companies will outperform the market by 2025, considering various factors such as stock buybacks, cross-shareholdings, and interest rates.

Japanese investment strategist holds different opinions, overseas investors will continue to watch

Japanese traders said the dollar remained strong at 157 yen in Tokyo's buying market as the market predicted the Fed's interest rate cut would be delayed.

Honda Motor has surged more than 20% in the past five days, with the stock price now at 1,512 yen. Investors are celebrating the 1.1 trillion yen stock buyback plan, creating a celebratory market. However, Japanese stock traders believe that Honda's attractiveness to retail investors is due to the weak yen, which increases their profits when exporting overseas. But these short-term gains have limited impact on the overall market.

Nomura Securities investment strategist Kazuo Kamitani said that due to the lack of new trading incentives before the Christmas and New Year holidays, overseas investors will continue to watch the market, and Japan's trading market will continue to be sluggish for a while.

The current Exchange Rate level of the US dollar against the Japanese yen provides overseas investors with a favorable opportunity to enter the Japanese stock market, but the actual market reaction still needs to consider more variables, such as possible intervention by the Japanese government, the overall global economic environment, and market sentiment. Although there are signs that foreign capital may return, there is still uncertainty in the short-term volatility and long-term forecasts of the market.

This article Goldman Sachs: The depreciation of the yen is beneficial for overseas investors to buy Japanese stocks, Japanese analysts have different views. It first appeared in Chain News ABMedia.