Japan Might Look Expensive But You Need To Dig Deeper

Japanese Value - more gains ahead?

Japan typically isn’t the region you would associate with expensive equities, but according to CLSA strategist Nicholas Smith, there seems to be a growing chorus among investors that the Japanese market, having gained 12% since the start of 2017, is now too expensive.

• Convexity And Money Volatility Points To A VIX Below 8

However, Mr. Smith argues that the market as a whole is not that expensive, but the most in-demand stocks, particularly low volatility equities, pricey compared to historic multiples.

Specifically, Smith opines:

Japan’s Topix is cheap: on PE; on EV/Ebitda and the number of companies on negative EV; on cashflow; and on book and the percentage of stocks trading below that book....