- Japanese equities are appealing from a valuation standpoint as compared to U.S. equities.
- The Japanese yen, meanwhile, has started to rebound, and this rebound might continue given that positioning has been quite bearish recently.
- U.S. equities look expensive; a pullback might occur in the near term, or over May (or into the summer).
- While Japanese stocks might follow in a large risk-off event, the more attractive valuation could buffer the drawdown.
- Meanwhile, the yen, classically a safe haven, could strengthen further against the USD in a risk-off event. Overall, EWJ looks like a good portfolio diversifier at present.
For further details see:
EWJ: Japanese Equities Look Relatively Cheap