Japanese stocks beginning to move
Today’s session saw the Nikkei close above 23,000 for the first time since the January sell-off. The chart below shows the Nikkei well positioned for a rally. Note: a) 3 higher lows b) the index on the right side of a long-term uptrend, and c) the first close higher above a 7 month resistance (the break).
This specific setup offers a good risk-reward: Entry now at 23,100 with a stop-price at 22,000 -last swing higher- for just a 5% risk.
Data based on Japan's Ministry of Finance data, and compiled by CLSA, shows the profitability of corporate Japan surging to its highest level since comparable data started being compiled in 1954. Growing data shows that Japan — in the face of a permanently bearish view of Japan’s demographics, high public debt and historically weak corporate governance — is midway through a historic turnaround in productivity and corporate return on equity. That view, said Morgan Stanley in a report published this week “puts us strongly against the consensus opinion that Japan should remain a structural underweight in global equity portfolios”.
This specific setup offers a good risk-reward: Entry now at 23,100 with a stop-price at 22,000 -last swing higher- for just a 5% risk.
Data based on Japan's Ministry of Finance data, and compiled by CLSA, shows the profitability of corporate Japan surging to its highest level since comparable data started being compiled in 1954. Growing data shows that Japan — in the face of a permanently bearish view of Japan’s demographics, high public debt and historically weak corporate governance — is midway through a historic turnaround in productivity and corporate return on equity. That view, said Morgan Stanley in a report published this week “puts us strongly against the consensus opinion that Japan should remain a structural underweight in global equity portfolios”.
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