Shorting Japan

Japanese equities are taking a beating this week. Its earnings season over the next few weeks appears particularly gloomy. Over the last 12 months, the global growth slowdown has been especially troublesome for Japanese equities, which have steadily unperformed DM equities. The underperformance has also been a common theme in the 12-months leading up to U.S. recessions (see: “Japan and the slowdown playbook”, January 29th). Despite the relative value in Japanese equity valuations, speculators have extended their short bets to account for more than half of all trades on the Tokyo Stock Exchange! Without some earnings surprises to the upside, it remains difficult to build the tactical case in favor of growth-sensitive Value stocks, including Japanese equities.

 

 

 

DISCLAIMER: This report was prepared for circulation to institutional and sophisticated investors only and without regard to any individual’s circumstances. This report is not to be construed as a solicitation, an offer, or an investment recommendation to buy, sell or hold any securities. Any returns discussed represent past performance and are not necessarily representative of future returns, which will vary. The opinions, information, estimates and projections, and any other material presented in this report are provided as of this date and are subject to change without notice. Some of the opinions, information, estimates and projections, and other material presented in this report may have been obtained from numerous sources and while we have made reasonable efforts to ensure that the content is reliable, accurate and complete, we have not independently verified the content nor do we make any representation or warranty, express or implied, in respect thereof. We accept no liability for any errors or omissions which may be contained herein and accept no liability whatsoever for any loss arising from any use of or reliance on this report or its contents.

© 2019 Pavilion Global Markets Ltd. All rights reserved. This report may not be reproduced, distributed or copied, in whole or in part, in any form, without the written consent of Pavilion Global Markets. Pavilion Global Markets Ltd. is a CIPF member.