The Bank of Japan (BOJ) hiked interest rates for the first time since 2007. Kazuo Ueda, the Governor of Japan’s central bank, ushered in the new era while stressing the need for maintaining an accommodative stance.
The historic move signals Japan pivoting away from its years of economic stagnation and deflation. However, a lack of clarity over future rate hikes resulted in weakness in the Japanese Yen. Traders had largely anticipated a rate hike this week after Rengo, the largest union group in Japan, announced higher-than-expected wage deals recently.
The Nikkei 225 index rose higher today, and Japanese stocks could continue to tick higher as the ushering in of higher rates points to a recovery and sustainable growth in Japan’s economy. Nikkei 225 has rallied by nearly 46.5% over the past year amid soaring investor enthusiasm.
Japanese Stock Rally Anticipated
The BOJ’s actions could potentially benefit Japanese real-estate companies such as Mitsubishi Estate (OTC:MITEY), Sumitomo Realty (OTC:SURDF), and Mitsui Fudosan (OTC:MTSFY). A rise in customer deposits and interest on their deposits with the BOJ could also benefit banks including Mitsubishi UFJ Financial (NYSE:MUFG) and Mizuho Financial (NYSE:MFG).
Another factor that could add fuel to the rally in Japanese stocks is major global economies cautiously weaning away from China. Chipmakers such as Taiwan’s TSMC (NYSE:TSM), South Korea’s Samsung (GB:SMSN) (OTC:SSNLF), and America’s Intel (NASDAQ:INTC) are increasingly looking at Japan to add to their footprint.
What Are the Best Japanese Stocks to Invest In?
Top Japanese names such as Nomura Holdings (NYSE:NMR), Toyota Motor (NYSE:TM), and Honda Motor (NYSE:HMC) have rallied by over 60% each over the past year. Despite these price gains, the TipRanks Comparison Tool indicates these names are still trading at relatively inexpensive price-to-earnings multiples as compared to their global peers. This points to extra legroom for further price appreciation in these stocks.
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