Anika Begay
Japan’s stock market has recovered from last week’s sell-off, and investment firm Bernstein sees promise ahead, recommending a specific trading strategy and naming stocks with an overweight rating. Japan’s broad-based Topix index plunged 12.23% on Aug. 5, and the benchmark Nikkei 225 index fell 12.4%, its worst decline since “Black Monday” in 1987. Both indexes have since recovered some losses, with the Topix and Nikkei closing 2.83% and 3.45% higher, respectively, on Tuesday. Referring to past crises, analyst Rupal Agarwal noted that “the near-term bottom of the market may have been reached; and the recent dovish commentary from the BOJ [Bank of Japan] is likely to halt the forced tailwinds.” “The sharp correction has provided long-term investors with a great opportunity to add Japan back, as the structural story has never been broken. However, given broader macro and political uncertainty, rising equity risk premiums and moderating earnings revision trends, we expect markets to remain volatile,” he added in an Aug. 8 research note. Below are four stocks in the investment bank’s defensive screen, which are listed on the Tokyo Stock Exchange. They also trade as American Depository Receipts in the United States. All stand out as having substantial upside potential, according to FactSet consensus price targets. Stocks Trading at a ‘Deep Discount’ Among the names on the bank’s screen is video game company Nintendo. It made headlines after fiscal first-quarter revenue and earnings tumbled as sales of its older Switch console declined. Nintendo’s shares tumbled after the announcement but remain up 5.3% year-to-date. Of 25 analysts covering the stock, 14 rate it “buy” or “overweight,” eight rate it “overweight,” according to FactSet data. have a hold rating, while three have a rating of underweight or sell. The average price target for the stock is 7,750 Japanese yen ($52.5), giving it about 19% upside. Other companies that appeared on screen included video game player Capcom, electronics maker Keyence Corp and entertainment company Bandai Namco Holdings. Analysts on average give Capcom more than 19% upside, Keyence nearly 24% upside and Bandai Namco 22.5% upside potential, according to FactSet. — Vscek’s Michael Bloom, Charmaine Jacob and Arjun Kharpal contributed to this report.
