Investors in Japanese equities may see some attractive buying opportunities as a result of temporary volatility in the markets, says Nikko Asset Management.
Naomi Fink, chief global strategist at Nikko AM, said the Bank of Japan’s resolve to normalise policy, albeit gradually, is likely to keep the yen supported.
The Japanese currency has rallied in recent days amid a sell off in Wall Street and a decline in Asian stocks. It rose to 144.95 versus the dollar on Wednesday, following a 1% rally overnight.
However, Fink said that versus the dollar, she does not foresee the yen spending time back above 150.
“This may in turn bring some temporary volatility that impacts equity valuations which could create buying opportunities,” she explained.
The asset manager said it retains its stance that Japan’s “virtuous cycle” of wages and prices will remain intact, with growth likely to remain above potential. It also expects inflation to surpass the Bank of Japan’s 2% target in the short term.
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