On January 27th, Kei Okamura, Senior Vice President & Portfolio Manager on the Japanese Equities team at Neuberger Berman, sat down with Bloomberg’s Insight with Haslinda Amin to discuss his view on Japan’s attractiveness to foreign investors despite the Bank of Japan (BOJ) rate hikes since 2024.
Key Takeaways:
Mr. Okamura remains bullish on Japanese equities, predicting continued foreign investment in Japan throughout 2025.
Japan's strategic geographical location and long-standing alliances with Western nations, particularly in the semiconductor sector, make it a prime destination for international trade and investments.
Despite global uncertainties, the yen may strengthen as a safe-haven currency with the BOJ tightening monetary policy, impacting Japanese equities.
Yen appreciation could reduce imported cost inflation and boost consumer spending due to higher wages, benefiting domestic-oriented Japanese companies.
Japanese companies in consumer staples and discretionary sectors are more concerned about labor shortages and rising input costs than interest rate hikes.
The BOJ's gradual interest rate hikes, with intervals of four to six months, are manageable for most companies, with conservative yen expectations potentially leading to positive earnings surprises.
Upcoming earnings reports will provide better visibility into the earnings outlook for the next year, with potential for significant growth if the yen remains stable.
