Trading in the Japanese Stock Market
Trading only in the UK or the US stock markets is not the best possible investment strategy.
Traders need to know that if one part of the world stagnates another part might boom, this is why considering all options is impeccable. The main index of the Japanese stock market is Nikkei 225 which has been famously outperformed by the main stock markets around the world for decades. However, Japanese stocks and Nikkei 225 are famous for less growing tendencies.
Since the 2008 recession, the Nikkei 225 went from around 8 000 JPY at the end of 2008 to around 24 000 JPY in 2018. These numbers indicate that the overall index value has tripled over these 10 years.
Besides, Trading in the Japanese stock market is exceptionally attractive for lots of traders around the world. Sometimes the major reason for this is that their products and companies are too big to be ignored. Moreover, the Japanese companies on the stock market are some of the largest firms in the world.
While Talking about the Japanese stock market, it should be noted that the price-earnings ratio (PE) as a whole is 12.4 according to statistics of May 2020. On the other hand, the PE ratio of the US equals 17.4. This means that the Japanese stocks are way cheaper to buy than the US stocks while the level of income of these two countries is almost the same. This information indicated that there is more value to invest in the Japanese company stocks rather than US stocks and there is a better chance of gaining a larger return.
Best Japanese Stocks to invest in
The Japanese stock market includes giant Automobile and electronics companies that are quite popular on a global scale. Such kinds of stocks include Toyota Motor Corp, Softbank Group corp, Sony Group Corporation, and Honda Motor. We will analyze each of these companies briefly and highlight their most important characteristics.
Toyota Motor Corporation
Toyota Motor Corporation is one of the leading automobile companies in the world. If we talk about the revenue we can see that the overall income of Toyota Motor Corporation has been increasing over the past years and nowadays it has a value of 280 billion dollars which is quite impressive.
On the other hand, the net income which means the actual income of the company talks more about the latter stock. This company, unlike a lot of other car manufacturers, is generating profits consistently around 20 billion dollars each year. It means 5 billion dollars each quarter in net profit, this is what Toyota Motor Corporation manages to generate as an overall income.
On top of that, the actual worth of the shares has also gone up considerably high and has been increasing over time. This means that these Japanese car stocks have more value each year. The stock has a P/E ratio of 9.3.
Besides, the revenue, earnings, and the actual asset value of the company are constantly growing. Earnings are predicted to grow by 9.85% in the future. Therefore, we can freely say that it is indeed the stock that is worth investing in.
Softbank Group Corp
Softbank owns 29.4% of Alibaba Group and is considered to be one of the leading shareholders around the world. They also own a lot of stake in T-mobile and also made over 11 billion dollars in their DoorDash investment. This means that this company really knows how to invest in the greatest companies and they also run the largest technology capital venture fund in the world with 100 billion dollars in capital.
Besides, if we look at how the company has grown between 2015-2020. we will see that the Softbank Group Corporation stock has grown 75.71% over the year 2020, However, they have experienced their first annual performance loss due to the weak economic condition caused by the pandemic of 2020.
These Japanese tech stocks had a big investment loss of 100 billion dollars. This happened for the first time in the 39 year history of this company. This tech conglomerate is expected to lose about 17 billion in its Vision Fund. This is believed to lead the company to its greatest losses yet.
However, while talking about the Softbank Group Corporation, it should also be noted that the company plans to raise 41 billion dollars to expand share buyback and to cut debt. It is very good news for international traders because any type of company that can buy back their shares is a great thing for the investors as they can expect big growth down the line.
Sony Group Corporation
Sony Group Corporation is a Japanese conglomerate that is a multinational company and produces electronic products. its headquarters are located in Tokyo, Japan. It is considered to be the biggest media conglomerate according to its overall revenue worth of 8.259 trillion dollars.
According to the statistics of late 2020, the intrinsic value of the company is 91 dollars a share. Besides, the company’s book value is constantly increasing which means it is very likely to increase the intrinsic value of the stock.
In terms of the trading history, the company had its ups and downs in earnings, however, from 2015 to 2020 Sony stocks managed to reach their actual value. On top of that, the overall revenue of the company has been steadily increasing and by 2020, it reached about 76 billion dollars. The gross profit has decreased a little bit but according to the weak market condition all over the world at the time, it is quite justifiable. We can freely say that the Sony Group Corporation takes an honorable place in the Japanese stocks list.
Honda Motor
Honda Motor is also a Japanese conglomerate that produces automobiles, motorcycles, and other power equipment. The company’s share value has increased significantly over time. The fact that the book value of the company is much higher than the current share price is probably the most essential factor why it is worth investing in Honda Motor stocks. The minimum and maximum book value of Honda Motor according to April 2021 is 0.4433 and 0.9221.
Besides, since 2008 this company has experienced a consistent revenue increase. The overall revenue of Honda Motor was 142 billion dollars before the 2020 pandemic. On the other hand, the buying opportunity of these Japanese car stocks has increased. The company has a strong net income as well, it’s been very consistent with about five billion dollars a year.
On top of that, even though the company’s debt is increasing over time, this does not mean that the process of growth of Honda Motor is being stopped by any means. The PE ratio of the company has also gone up, the average range has been from 11 to 15 which indicates that the Honda Motor stocks are going to be very safe in the long term. Investing in this stock is one of the best possible options while talking about Japanese stocks.