Japanese Construction Overbought, Impact Of 2020 Olympics Oversold

Japanese construction stocks have rallied after the announcement that Tokyo would host the 2020 Olympics, but the actual impact of the games has been overestimated and the stocks are now overbought, says Citi Japanese equities analyst Shusuke Terada.

Bearish sentiments on Japanese construction

Terada is bearish on the Japanese construction sector, but not because he thinks it is facing a downturn. There was plenty of reason to be optimistic about earnings growth, but the prospect of large orders for the Olympics has given people unrealistic expectations. “Even if profits reach record levels by...