“However, Japan’s valuation and ROE levels are still lagging the US and Europe,” the US bank adds, pointing out that the median P/BV ratio of MSCI Japan constituents stands at 1.5x, 25% lower than that of Europe and 53% lower than that of the US.
Morgan Stanley, one of the louder bulls on Japan, has found further reasons to bet on this market — potential gain in valuations to be squeezed out from companies showing improvements in their corporate governance.
In its Sept 13 report, a team of Morgan Stanley analysts stated that Japan remains their preferred equity market globally. “Our thesis is clear — We continue to like Japanese equities as nominal GDP accelerates, policy and JPY remain supportive, and corporate reform advances,” says Morgan Stanley.
