BlackRock upgrades Japan stocks, says they’re attractive despite Olympics Covid risks
BlackRock upgraded Japanese stocks this week, saying that earnings growth will be lifted in the second half of this year, even as its “virus dynamics” improve.
The emergence of Covid cases surrounding the Olympics held in Japan is “obviously a risk,” Thomas Taw, an investment strategist at BlackRock, told CNBC on Wednesday.
The emergence of Covid cases has cast a shadow over the Tokyo Olympics even Friday’s official opening.The first positive case hit the Athlete’s Village in Tokyo last weekend, and more than 70 cases have been reported to be linked to the Games since.
Why BlackRock likes Japan stocks
However, Taw pointed to conditions that favor the Japanese markets despite the heightened risks from Covid during the Olympics.
“There’s obviously a risk in terms of what happens with the Olympics,” Taw told CNBC’s “Squawk Box Asia.” However, he said it was a “temporary headwind.”
For one, valuations are “a little bit more appealing in a place like Japan,” and the country’s central bank will continue to be accommodative, Taw said. He is also positive on earnings growth for companies there.
“Over the second half of the year, I expect some money will rotate into places like Japan, and Europe, which we have upgraded to overweight.”
In a report on Monday, BlackRock said it has upgraded Japanese stocks to neutral, which means the stocks are expected to perform on par with their peers in other markets.
“We upgrade Japanese equities to neutral. We see a global cyclical rebound helping boost earnings growth in the second half of the year. The country’s virus dynamics are also improving,” it wrote.
Reference: CNBC
Read More: https://www.cnbc.com/2021/07/
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