Japan’s stock market: Take advantage of the growth opportunity.

Last Updated: 22. Januar 2024By

Japan’s stock market has been seen as an unattractive no-go area for the past 30 years. However, we are now experiencing a turnaround: Many Japanese companies are using their cash reserves and are offering interesting investment opportunities, even in the second tier.

A market full of potential Japanese companies are known for their overflowing cash reserves, future cash flow, and almost no liabilities – a dream for any shareholder. For example, Prestige International, similar to German ADAC, has a liquidity of approximately 130 million EUR with a market value of half a billion EUR. With plans for higher dividends and stock buybacks, there is increased interest from professional investors.

Source: Tradingview, daily chart Tokyo is putting on the pressure The Tokyo Stock Exchange has urged around 3,300 companies to increase value for their shareholders. Guidelines such as a return on capital of over 8% and a price-to-book ratio of over 1 put pressure on companies. This call is aimed at stimulating the capital market and the economy, leading to increased stock buybacks and higher dividends. These stock exchange guidelines are driving towards an investment culture. For example, Kawasaki Heavy Industries, known for motorcycles and active in hydrogen technology, is seen as an undervalued value stock.

Source: Tradingview, daily chart Opportunities in the middle market Japan’s middle market offers great opportunities. Companies like T. Hasegawa in the flavor industry and Toyo Seikan in the aluminum can sector demonstrate the strength of Japanese niche companies. These companies are known for their technical expertise and market dominance. In the electronics, chemical, and ceramic industries, there are many companies with high growth potential. Maruwa, a manufacturer of heat-resistant ceramic parts, and Fujimori Kogyo, active in pharmaceutical packaging, are examples of such potential.

Source: Tradingview, daily chart Japan as an alternative to China Japan also offers an alternative to China, especially in the automotive supply and IT services sectors. Companies like Nifco, Obic, and Hoshizaki demonstrate the diversity and strength of the Japanese industry. Overall, the Japanese market offers a wealth of opportunities, not only due to its own strengths but also due to the growing trade relations with ASEAN countries and potential tailwinds from the US-China trade conflict. Boost your portfolio and secure my exclusive stock tips in my premium stock service now!