Nice take from the Global Quantitative Research team at Societe Generale:
SocGen goes on to add:
• In a world where more and more assets are being pushed up to uncomfortably high valuation multiples, finding assets cheap enough to buy is a serious challenge for investors who need to invest and for whom holding high levels of cash is not an option. With the Nikkei down 14% from its peak at the beginning of the year while other indices are hitting all time highs, should Japan be back on the menu for those seeking a value home for their cash?
• Our deep-value screens increasingly signal this. We regularly publish lists of stocks that pass our interpretation of Benjamin Graham’s Deep-Value screen and have used it in the past to highlight deep value opportunities within equity markets – see link. Recent readings indicate that the only developed market region seeing value emerge is Japan. Throw in the potential for more central bank action in response to the lacklustre impact of Abenomics’ arrows and a Yen-hedged foray back into Japanese equities may be the better choice than simply continuing to pay over for odds for more expensive US and European equity names.
Disclosure: Our clients own WisdomTree Japan (Yen Hedged) ETF