Short term - short (but not in a position so just waiting),
Medium + LT term long.
Why? Well a couple of reasons. Despite the retraction in sales and profits in the construction industry in Japan as evident from Ueki's results there are some rather signs of value.
I haven't even started a full accounting of undervalued Japanese stocks yet but can see that I will likely buy because:
- Ueki's market cap, for example, is almost 63% lower than its net assets. Compared to U.S. equities that is comparably significantly undervalued. As at December 2018 the average S&P 500 price to book ratio was 2.8 (and this was AFTER the December price drop). Compare that to a P/B value for Ueki of 0.35. i.e. The Company could be liquidated now and would return significantly more than the current price per share to investors.
- Investment Banks are entering long the market - seeing the market as oversold: www.cnbc.com/2019/05...pix-and-nikkei.html. I also read an article a while back that said Morgan Stanley is advising clients to exit US equities which will cause many to look elsewhere in the US and overseas for better value risk adjusted returns: www.investopedia.com...-stocks-now-4584941. I'm not sure if that is the one though,
- Likely due to having been in a 30 year bear market, the Japanese equity market likely has, on average, less downside risk as compared to US stocks: www.bloomberg.com/ne...any-market-sell-off,
- My TA points towards a significant appreciation of the JPY vs the AUD, USD, and EUR. If this happens, any returns will magnified. Despite its significant debt load (230% of GDP+) Japanese citizens are willing to take a financial hit buying government bonds with negative interest rates in order to support their Country.
- There are likely better, if not more undervalued, equities out there than Ueki. I feel encouraged to search for some deals.
Thanks for viewing
Medium + LT term long.
Why? Well a couple of reasons. Despite the retraction in sales and profits in the construction industry in Japan as evident from Ueki's results there are some rather signs of value.
I haven't even started a full accounting of undervalued Japanese stocks yet but can see that I will likely buy because:
- Ueki's market cap, for example, is almost 63% lower than its net assets. Compared to U.S. equities that is comparably significantly undervalued. As at December 2018 the average S&P 500 price to book ratio was 2.8 (and this was AFTER the December price drop). Compare that to a P/B value for Ueki of 0.35. i.e. The Company could be liquidated now and would return significantly more than the current price per share to investors.
- Investment Banks are entering long the market - seeing the market as oversold: www.cnbc.com/2019/05...pix-and-nikkei.html. I also read an article a while back that said Morgan Stanley is advising clients to exit US equities which will cause many to look elsewhere in the US and overseas for better value risk adjusted returns: www.investopedia.com...-stocks-now-4584941. I'm not sure if that is the one though,
- Likely due to having been in a 30 year bear market, the Japanese equity market likely has, on average, less downside risk as compared to US stocks: www.bloomberg.com/ne...any-market-sell-off,
- My TA points towards a significant appreciation of the JPY vs the AUD, USD, and EUR. If this happens, any returns will magnified. Despite its significant debt load (230% of GDP+) Japanese citizens are willing to take a financial hit buying government bonds with negative interest rates in order to support their Country.
- There are likely better, if not more undervalued, equities out there than Ueki. I feel encouraged to search for some deals.
Thanks for viewing