[Future forecast chart for Japanese stocks] The turbulent 2024 market price and notable stocks...

Conventionally, there have been only pessimistic views on Japanese stocks, such as “Japanese stocks are difficult to rise compared to US stocks” and “they have not been able to exceed high prices since the bubble because the Japanese economy has stagnated.” However, January to March 2024 had a very good start. This upward trend in Japanese stocks began around the end of 2023.

In particular, what became a hot topic at the end of 2023 was news such as “Buffett is interested in Japanese stocks,” which was reported every day. As for the content, Japanese stocks were “left undervalued against performance.”

In particular, Japanese companies are conventionally regarded as having low PER and PBR, and can also be evaluated as undervalued from the viewpoint of stock indicators. Furthermore, in 2023, “PBR 1 fold improvement reforms” etc. were reported, and it has become an age where managers must also be more aware of stock price increases. In addition to these news that began in 2023, what kind of point news will we have to pay attention to in 2024?

The “dollar to yen rate” is an essential point of view when considering Japanese stocks. In particular, large companies such as Toyota, which are used in the Nikkei Average, etc., have a high overseas sales ratio, so there is a strong tendency for good settlement when the yen depreciates. It was around 115 yen in 2021

The dollar yen will depreciate until 150 yen in 2023.

However, after October, the yen appreciated, and it seemed that the depreciation of the yen had come to an end. However, the yen depreciated again until 2024, and in the market price as of 2024/3, it is at a level of around 150 yen per dollar.

In particular, the 150 yen range was maintained even after receiving the news of the “Bank of Japan Negative Interest Rate Cancellation” in March, and the market may also be evaluating that the current exchange rate is appropriate.

If this depreciation of the yen continues, it is necessary to consider from various perspectives what points should be paid attention to when investing in the 2024 market price.

Impact of the depreciation of the yen on stock prices and the economy

The depreciation of the yen brought good financial results to large companies such as Toyota, and was a tailwind. However, in addition to that, an important point is “the appeal of Japanese stocks seen from overseas.” From the perspective of overseas investors, if the yen depreciates, it will be easier to buy Japanese stocks, and upward pressure will be applied to stock prices. Furthermore, from the perspective of overseas investors, awareness of Japanese small and medium stocks is low, and funds will be concentrated on large Japanese stocks. Based on these things, in 2024, progressive investments with Nikkei average companies are more likely to benefit from market prices than aiming for small to medium growth stocks, and it will be an investment that is easier to succeed.

Due to the depreciation of the yen, inflation is currently progressing in Japan due to an increase in import costs, etc. In particular, from 2023 to 2024, “price transfers due to soaring material costs” became acceptable to consumers. Therefore, for retail and food-related companies, the soil for sales expansion is being prepared, and if raw material prices etc. settle down, there is a possibility that significant profits will be generated by leaving prices etc. unchanged.

Currently, the Bank of Japan's quantitative easing policy has also begun to be revised due to wage increases and inflation at large companies. If yen depreciation and inflation continue as is, there is a possibility that further interest rate increases will be implemented. For this reason, when considering investment policies, finance-related companies, etc. that have “interest rate hike benefits” should be paid attention to. Meanwhile, headwinds blow in the real estate sector. It is necessary to select stocks with an eye on these “beyond inflation.”

I was very impressed with the big rise in Japanese stocks in 2024, but personally I think it's time to tighten the strings. In particular, there are many stocks that “have nothing to do with performance” in such a rising market. For this reason, will performance really improve again in the future? It is necessary to examine it. Also, with regard to interest rate hikes, it depends on inflation, but the Bank of Japan also has expressed its intention that it is an “mitigation route for the time being,” and it is anticipated that overall stock prices will not fall due to drastic interest rate hikes like the United States.

A company that sells semiconductor manufacturing equipment. In addition to computers, smartphones, etc., semiconductor chips are essential even for AI, which has recently been a hot topic. In particular, stock prices of semiconductor-related companies have risen rapidly in the US, and there are benefits. The overseas sales ratio is about 90%, and if the depreciation of the yen continues, performance ↑. It is also ranked 3rd in terms of market capitalization in Japan, and matches the 2024 market price where large companies are dominant.

“Mitsubishi UFJ” is a financial company active not only in Japan but also overseas. The profitability of overseas businesses improved last year due to the impact of America's interest rate hikes. This year, along with the Bank of Japan interest rate hike, loan interest rates will rise domestically, and an increase in profit margins is expected. A few years ago, our company was popular as a high-dividend stock, with a dividend yield of 4 to 5%, but now the dividend yield itself has declined to just under 3% as stock prices rise. However, this year is likely to be a company that can aim for capital gains. Also, due to improved profitability, annual dividends have increased drastically from 32 yen at the end of March 2023 to 41 yen at the end of 2024/3, and further dividends are expected in the future.

There are concerns about headwinds in the real estate industry due to the Bank of Japan's interest rate hike. The reason is that when real estate is purchased, loan interest rates rise, and acquisition costs increase, so demand for real estate declines. Also, when real estate owners also receive loans or loans at variable interest rates at the time of purchase, profitability deteriorates as monthly repayment amounts rise. As a result of this, real estate-related companies and REIT prices are falling. In particular, dividend interest yields have risen in REITs, and stocks of 4.5% or more have also increased. In such an environment, REITs are also attractive as high-dividend investment options for investors who place importance on income gains, etc.

Even as headwinds blow in the real estate industry, companies that are performing well are “Clear (2998).” Our company is an enterprise that operates real estate crowdfunding, and small investments are possible by crowdfunding real estate investments that previously required large-scale funds such as loans, etc., and are attracting new investors to the real estate industry. Sales rose by about 20%, from 16.4 billion yen at the end of March 2023 to 19.7 billion yen at the end of March 2024. Also, operating income and final profit are +70% compared to the previous year, making it an enterprise that has achieved rapid growth, and future stock prices can be expected.