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Japanese equities (NYSEARCA:EWJ) have long-term opportunities due to the country’s economic revival, which has strong roots, said Yuichi Chiguchi, Japan chief investment strategist at BlackRock.
As the Asian country’s economy get a boost, with mild inflation improving wages and corporate pricing power, its equity market is looking great, according to BlackRock’s 2024 Mid-year Global Outlook report.
“Japanese stocks warrant a higher allocation on such horizons of five years or longer than the benchmark would suggest,” analysts said.
BlackRock holds an overweight allocation to Japanese equities (EWJ), with a preference for unhedged exposure vs. currency hedged (DXJ).
In addition, they see a medium-term improvement in corporate earnings due to the return of inflation and wage gains.
“We are watching for signs of structural inflows into local stocks from households after an overhaul to the country’s tax-exempt investment vehicles.”
Lastly, healthcare is a great sector opportunity within the Japanese market due to the country’s aging population.