Personal Wealth Management / Expert Commentary

Fisher Investments Reviews Its Outlook on Japanese Stocks

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher shares his latest outlook for Japanese stocks. According to Ken, Japan is mostly comprised of value-oriented companies, which have underperformed growth-oriented investments for much of the last decade. However, Ken says there are reasons for optimism looking forward.

Ken believes value stocks will become more appealing as lending improves and economic growth continues to accelerate. While Ken acknowledges Japanese firms are not the most innovative, he says many of their export-focused, economically sensitive industries can still do well within this kind of environment.


Ken Fisher:

So, sometimes people ask me right about now with Japan moving away from its negative interest rate environment, what do I think about the outlook for Japanese stocks moving forward?

Now, I'm going to put that into some ways that I think is the right way to think about it, because I don't know why I put in any other way. Fact is, that on the one hand, most of the Japanese market is not derived by the kinds of stocks that have led the last three, four, five, six, seven, eight years, which would be growth oriented companies—particularly growth oriented. Japan is more, and much more, Industrial production and value-oriented companies, and that's lagged. It has its intermittent times in the sun during that longer period of lagging, but that's been a category that just generally over recent times, last number of years, has been lagging overall. I think that will pick up later in 2024 and is doing okay now.

But I don't think it's so much because of the negative interest rate environment. I think it's because value will become a stronger part of the market than it's been. Some of that will be because of the global function of central banks starting to cut rates, at whatever level they do it, whenever they do it. I don't want to speculate about that. You never speculate successfully about what central banks will do because they never know what they'll do. They just do.

And then part of that will be, that as the economy globally hasn't gone into recession, has maintained stability, and starts to accelerate into relative normalcy— which is where we actually are, even though that's not commonly appreciated. Those firms that are more economically sensitive, which is what a lot of Japanese firms are with particular orientation toward export out of Japan to where there's stronger economies, otherwise, will start to do better overall, and I think they'll do fine. I don't think it's a bad part of the market to be in.

Now, arguing against that momentarily and partially. The fact is that Japanese firms are good, solid firms doing well in the fields that they operate in, but they aren't the most innovative. They aren't the most creative. They're not the ones creating the never yet, next done thing. But in this kind of environment, I don't think you really need that to have the stocks do pretty well. Thank you for listening to me and I hope you found this useful. 

Voice of Ken Fisher:

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