A bright spot

Canada's Inflation Expected to Ease in May, Impacting BoC's Rate Decision

Mitsubishi Motors and Nissan Motor decreased by 2.5% and 2% respectively

InstaForex Analysis InstaForex Analysis 23.12.2022 19:24
  Major Asian indices posted losses of up to 1.7% after yesterday's uptrend. The only indexes which closed in positive territory were the Shanghai Composite and Shenzhen Composite, which edged up by 0.01% and 0.07%, respectively. Other indices decreased: the Hang Seng Index fell by 0.61%, the S&P/ASX 200 dropped by 0.77%, and the Nikkei 225 slid down by 0.96%. The KOSPI was the worst performing index, shedding 1.7%. As usual, Asian markets followed US indices, which had declined the day before. The downtrend was triggered by the latest US GDP data for the last quarter. Although GDP increased by 3.2% and exceeded the preliminary estimates of 2.6% and 2.9%, market participants were anxious about the harsh monetary policy measures taken by the Federal Reserve. A stronger economy could lead the Fed to raise its key interest rate even higher. This, in turn, may result in the economic downturn that all investors fear. Meanwhile, Japanese consumer prices rose by 3.8% last month from the same period in 2021 hitting its highest level in 30 years. In October, inflation stood at 3.7%. Core CPI, which excluded food, climbed by 3.7% in November from 3.6% in September, reaching the highest level in four decades. The index exceeded the central regulator's 2% target for the eighth month in a row. Read next: Poor Stock Market Performance Meant That For Many Investors The Dollar Was A Safe Currency This Year| FXMAG.COM Shares of Japan's biggest companies plunged, with Advantest, Corp. down by 4.5%, Tokyo Electron, Ltd. dropping by 3.8% and Sapporo Holdings, Ltd. declining by 3.4%. Mitsubishi Motors and Nissan Motor posted slightly smaller losses of 2.5% and 2%, respectively, while Toyota Motor and Mazda Motor declined by 1.3% and 1.1%, respectively. At the same time other Japanese stocks increased: shares of Kansai Electric Power rose by 5.7%, Tokyo Electric Power gained 4.2%, Mitsubishi UFJ Financial Group and Chiba Bank added 2.8% and 1.8% respectively. On the Hang Seng Index, Alibaba Health Information Technology fell by 5.1%, BYD and Geely lost 4.5% and 3.3% respectively. Netease dropped 3%, while Xiaomi and lost 2.5% and 2.3% respectively. The KOSPI was dragged down by falling stocks of major companies, with Samsung Electronics down by 1.9% and Hyundai Motor retreating by 0.6%. The largest Australian companies also posted losses. GUD Holdings dropped by 5.6%, Star Entertainment Group slid down by 4.8%, Xero and Seek lost 1.9% and 1.7%, respectively. Computershare and BHP dropped by 0.7% and 0.2%, respectively. Relevance up to 13:00 2022-12-24 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. Read more:
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Did you know that Warren Buffet has more than a 5% stake in Mitsui, Itochu, Mrubeni, Sumitomo and Mitsubishi?

Conotoxia Comments Conotoxia Comments 12.04.2023 15:18
Warren Buffett has raised his stakes in five Japanese trading companies. The American investor announced that he is considering additional investments in these companies. Why has Buffett turned to Japan? Warren Buffett, chairman of Berkshire Hathaway, announced in an interview with Japanese media that his company has increased its holdings in several Japanese trading houses and is interested in further investment opportunities in the Cherry Blossom country. According to data compiled by Bloomberg, these positions are now worth around $13 billion. Buffett said that he has since increased his holdings further, but his company has so far not officially confirmed any additional purchases and also has no holdings in other large Japanese companies. Five trading giants Mitsui, Itochu, Marubeni, Sumitomo and Mitsubishi are the five largest Japanese trading companies, also known as Sogo shosha (which simply means multi-trade) Buffett has more than a 5% stake in each of these companies specialising in international trade and distribution. Sogo shosha combine the characteristics of trading companies, distributors, manufacturers and business advisers. They have a wide network of contacts and negotiation skills that enable them to prosper effectively in international markets. These companies trade in energy raw materials, metals, chemical products electronics, textiles, food, machinery, among others. Sogo shosha play an important role in international trade and are crucial to the Japanese economy. It appears that the publication of the Buffet interview, coupled with the scale of Sogo shosha activity, may have contributed to the 1.6% rise in the Nikkei index (JP225). Source: Tradingview Why is Buffett investing in Japan? Investing in Japanese equities may involve risks that relate to: persistent zero economic growth for more than a decade, an ageing population or potential interest rate increases and monetary tightening. The latter factor may now play a particular role, especially in an era of rising global inflation and the weakening of the Japanese yen. In view of the possibility of interest rate rises, capital growth of Japanese companies is also to be expected. However, this could have a positive impact on the country's financial sector (excluding banks) and the strengthening of the Japanese currency, which has depreciated by as much as 16% against the US dollar since the beginning of last year. Read next: Franklin Templeton Fixed Income talk Norges Bank, Sveriges Riksbank, Swiss National Bank and Bank of Japan| FXMAG.COM The second factor in Buffett's interest in the financial sector of this market, appears to be the valuation of the companies in which he has invested. The basic ratio that determines after how many years an investment could double, i.e. price to earnings (P/E), is, in turn: Mitsui: P/E = 6, owned 6.8%. Itochu: P/E = 8.13, owned 6.2%. Marubeni: P/E = 5.4, owned 6.75%. Sumitomo: P/E = 7.7, owned 6.6%. Mitsubishi; P/E = 5.5, owned 6.66%. The values of this index are extremely low compared to the average value for the S&P 500 (US500) and the US Nasdaq (US100) technology company indices of around 22.2 and 24% respectively. Currently, the market average for Japan's Nikkei stock market is 20, which may explain Buffett's interest in this particular sector. Buffett's statement seems particularly interesting: "We don't think it's impossible that we will partner with them at some point in the future in a specific deal. We would love if any of the five would come to us ever and say, 'We're thinking of doing something very big or we're about to buy something and we would like a partner or whatever.'"   Grzegorz Dróżdż, Market Analyst of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.18% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Source: Why is Buffett betting on the Japanese trading sector? (
A Bright Spot Amidst Economic Challenges

A Bright Spot Amidst Economic Challenges

Ipek Ozkardeskaya Ipek Ozkardeskaya 25.09.2023 11:05
A bright spot If there is one bright spot in Britain with all this, it is the FTSE100. First, the rising energy prices are good for the energy-rich FTSE100. Second, softer sterling makes these companies more affordable for international investors, who should of course think of hedging their sterling exposure, and third, more than 80% of the FTSE100 companies' revenues come from oversees, which means that when they convert their shiny dollar revenues back to a morose sterling, well, they can't really complain with a stronger dollar. Consequently, if a more dovish BoE is bad for sterling, the combination of a hawkish Fed and a dovish BoE and a pitiless OPEC is certainly good for the FTSE100. The index has been left behind the S&P500 this year, as the tech rally is what propelled the American index to the skies, but that technology wind is now turning direction. The FTSE 100 broke its February to September downtrending trend to the upside and is fundamentally and technically poised to gain further positive traction, whereas, the S&P500 is heaving a rough month, with technology stocks set for their worse performance this year, under the pressure of rising US yields, which make their valuations look even more expensive.   Interestingly, the US 2-year yield peaked at 5.20% after the Fed's hawkish pause this week and is back headed toward the 5% mark, but the gap between the US 2-year yield and the top range of the Fed funds rate is around 40bp, which is a big gap, and even if the Fed decided not to hike rates, this gap should narrow, in theory. If it does not, it means that bond traders are betting against the Fed's hawkishness and think that the melting savings, the loosening jobs market, tightening bank lending conditions and strikes, and restart of student loan repayments and a potential government shutdown could prevent that last rate hike to happen before this year ends. And indeed, activity on Fed funds futures gives more than 70% chance for a third pause at the FOMC's November meeting, and Goldman Sachs now sees the US expansion slow to 1.3% from 3.1% printed in the Q3. KPMG also warned that a prolonged auto stoppage may precipitate contraction. And if no deal is inked by noon today, the strikes will get worse.   One's bad fortune is another's good fortune  The Japanese auto exports surged big this year, they were 50% higher in yen terms. The yen is certrainly not doing well, but yes, you can't have it all. That cheap yen is one of the reasons why the Japanese export so well outside their country. And in case you missed, the BoJ did nothing today to exit their hyper-ultra-loose monetary policy. They didn't even give a hint of normalization, meaning that the yen will hardly strengthen from the actual levels. In the meantime, Toyota, Mitsubishi and Honda shares are having a stellar year, and the US strikes will only help them do better. 

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