Japan's Undervalued Companies Offer Opportunities

Strong demand from Asia - particularly Chinese consumers - have boosted results for Japanese companies, but there are risks

Morningstar Analysts 18 September, 2017 | 3:56PM
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With the recent pullback in Japanese equities on geopolitical concerns, Morningstar analysts see opportunities to pick up select stocks, with almost one third of our covered stocks undervalued. Analysts currently have qualitative coverage on 59 Japanese companies, primarily in the consumer, financials, industrial, and technology sectors, of which four have strong competitive advantages and 18 have less defendable advantages.

Despite the recent uptick in domestic economic activity in Japan, we doubt that domestically driven growth opportunities are sustainable. Given our view that structural reform in Japan will be slow, we still prefer companies with global expansion opportunities. Recent results from some Japanese companies point to strong demand from Asia and particularly China, especially for higher value-added goods.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Mitsubishi Heavy Industries Ltd2,619.00 JPY0.00
TDK Corp4,420.00 JPY0.00Rating

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Morningstar Analysts   -