{"id":77013,"date":"2025-09-16T17:28:58","date_gmt":"2025-09-16T09:28:58","guid":{"rendered":"https:\/\/www.kgieworld.sg\/research\/?p=77013"},"modified":"2025-09-16T17:28:59","modified_gmt":"2025-09-16T09:28:59","slug":"weekly-securities-newsletter-japan-equities-uncertainties-ease-2","status":"publish","type":"post","link":"https:\/\/www.kgieworld.sg\/research\/weekly-securities-newsletter-japan-equities-uncertainties-ease-2\/","title":{"rendered":"Weekly Securities Newsletter: Japan Equities: Uncertainties Ease?"},"content":{"rendered":"\n
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Japan Equities: Uncertainties Ease?<\/strong><\/strong><\/p>\n\n\n\n

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Chart of the Week:
Powell\u2019s Dovish Remarks Spur Cut Bets; Fiscal Gains, Steeper Curve<\/strong><\/h2>\n\n\n\n

Powell\u2019s dovish tone at Jackson Hole boosted expectations for a September cut, with futures now pricing in two cuts by year-end. U.S. data remain resilient, with a modest labor market slowdown but no clear recession threat. July headline and core PCE came in at 2.6% and 2.9%, keeping inflation risks alive.<\/p>\n\n\n\n

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Market Recap 1:
Rate-Cut Bets Fuel U.S. Equity Rally Despite No Clear Slowdown<\/h2>\n\n\n\n

U.S. equities rallied broadly last week, with all three major indexes hitting intraday and closing record highs. Markets interpreted Powell\u2019s remarks at the global central banking forum – noting that \u201cpolicy remains restrictive, but shifts in outlook and risks may require adjustments\u201d – as dovish, lifting expectations for a September rate cut. Concerns over Fed independence and long-term inflation risks were largely overlooked, keeping sentiment upbeat. <\/p>\n\n\n\n

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Market Recap 2:
Powell Strengthens September Cut Bets: Bonds Rise, Dollar Falls; Lower Yields Lift Gold<\/h2>\n\n\n\n

Trump\u2019s continued pressure on the Fed, alongside Powell\u2019s comments, reinforced expectations for a September cut, driving a bond rally. Markets largely overlooked Fed independence and long-term inflation risks. The curve shifted lower overall, but with long yields falling less amid stable economic conditions, the curve steepened. Long-duration bonds, more sensitive to rate moves, outperformed, lifting the broader market.<\/p>\n\n\n\n

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What\u2019s Trending:
Korean Defense Exports Rise on Sustained Global Arms Demand<\/h2>\n\n\n\n

The Russia-Ukraine war has created equipment shortfalls requiring replenishment, while Europe\u2019s \u201crearmament plan\u201d further supports Korean defense firms. This month, Poland purchased 180 K2 tanks from Korea in a $6.7bn deal. Beyond Europe, Vietnam signed for 20 K9 howitzers, adding to a global client base that includes India, Finland, and the UAE.<\/p>\n\n\n\n

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In Focus 1:
U.S.-Japan Deal Offers Brief Relief, But Corporate Earnings Face Tariff Test<\/h2>\n\n\n\n

TOPIX and Nikkei 225 have hovered near record highs since mid-August. TOPIX currently trades at ~15x P\/E, slightly above the 10-year average but still reasonable. Recent factors supporting Japanese equities include:<\/p>\n\n\n\n

1. Markets widely expect the Fed to cut in September despite no clear recession risk.<\/p>\n\n\n\n

2. With Japan inflation easing and under control, the BoJ may hike twice next year to 1.0%, while the Fed could cut twice this year. The yen is expected to appreciate only modestly, posing little equity risk.<\/p>\n\n\n\n

3. The U.S. pledged to revise reciprocal tariffs and refund excess duties retroactive to Aug 7, easing concerns and boosting sentiment.<\/p>\n\n\n\n

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In Focus 2:
Buybacks and Reform Support Japan Equities Long Term; Wage-Price Cycle Intact, Favor Domestic Plays<\/h2>\n\n\n\n

Over the medium to long term, governance reforms, rising buybacks, and reduced cross-shareholdings will provide structural support to equities. Japanese firms are expected to keep strengthening balance sheets, raise payout ratios, and increase capex to drive long-term benefits and ROE, unlocking corporate value.<\/p>\n\n\n\n

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China Sunsine Chemical Holdings is a leading specialty rubber chemicals producer selling accelerators, anti-oxidant, vulcanizing agent<\/p>\n","protected":false},"author":10,"featured_media":75088,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_uag_custom_page_level_css":"","footnotes":""},"categories":[35],"tags":[],"class_list":["post-77013","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global-markets-weekly-updates"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t