Economics & Strategy — Equity Strategy: Third
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Economics & Strategy — Equity Strategy: Third

Daiwa Securities Group’s Kazuhiro Miyake repeats at No. 3.

Kazuhiro Miyake

Daiwa Securities Group

Daiwa Securities Group’s Kazuhiro Miyake repeats at No. 3. “Japanese equity prices will climb substantially in 2013,” the strategist declares. “In particular, I expect to see a strong rally in the run-up to the upper house [parliamentary] elections in July.” He predicts that the Nikkei 225 index — which advanced more than 19 percent, to 12,397.91, from January through March — will end the year up more than 41 percent, at 14,700, assuming an exchange rate of ¥95 to the dollar, which is where it stood in late March. If the yen weakens to ¥100, the index will soar 51 percent this year, he says; if the currency falls to ¥105, the Nikkei will skyrocket some 61 percent. The surge will slow next year, the strategist adds, but even so he is forecasting a gain of 14 percent in 2014. Structural changes made in recent years have left many companies well positioned, Miyake notes. “In a bid to counter the [past] persistent yen appreciation, Japanese firms have made strenuous streamlining efforts and revamped their earnings mixes and other operational setups, notably shifting production overseas and bolstering their financial standing,” he explains. “With the yen depreciating these companies’ efforts will most likely pay off in a more visible manner.” Miyake is bullish on automobiles, brokerages, real estate and rubber sectors; he’s bearish on airlines, electric and gas utilities, oil companies and pulp and paper names. — Thomas W. Johnson

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