“The depreciation of the yen against the US dollar as a result of higher US bond yields should also support Japan equities,” said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan. Given that manufacturing firms dominate Japan’s stock market, “although Trump’s victory would benefit most of ex-China Asian equity markets, the Japanese equity market should benefit more.”
Donald Trump’s growing lead in the US presidential race has sparked a rush to identify the key winning trades in global markets. History suggests that Japanese stocks are a good bet.
Japan’s Topix Index gained almost 30% in dollar terms in the one-year period after the 2016 US presidential election which Trump won, beating the S&P 500 and the MSCI World Index which each rose roughly 20%. Strategists say the boost from a weak yen will give Japanese shares a leg up, just as funds seek alternatives to Chinese equities in anticipation of a tougher Trump stance toward Beijing.
