Investing.com-- Japanese stock markets are expected to benefit from an improving local economy in the coming years, UBS analysts said in a note, although they still forecast trade-relatated headwinds from increased U.S. tariffs.will close next year at 2,900 points, a roughly 5% upside from current levels, but a touch lower than UBS’ prior forecasts.
But UBS also expects Japan’s economy to clock nominal growth amid sustained inflation and higher wage increases. The brokerage said that planned corporate governance reforms in Japan also increase the potential for more shareholder returns and better overall value. “We are taking a bullish stance on consumption-related sectors such as retail and food, which have lagged the Japan stock market for the past two years, on the view that momentum behind a consumption recovery and industry restructuring will increase alongside the rise in real wages,” UBS analysts wrote in a note.
But UBS noted that political turmoil in the country could present downside risks, especially after a coalition led by the ruling Liberal Democratic Party failed to win a majority in recent general elections.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors.