Japanese household spending declined at a slower rate than anticipated in October. Despite ongoing softness in broader consumption trends, the Bank of Japan is still expected to raise interest rates to normalize monetary conditions after a prolonged period of easy policy.
Asian equities dipped as investors awaited US jobs data. Meanwhile, the yen remained stable after experiencing fluctuations against the dollar, following a record increase in base salaries for regular workers in Japan.
Macquarie has identified its top investment picks for 2025, focusing on markets in Korea, Japan, and Hong Kong. Each of these selections is projected to deliver over 50% upside, highlighting significant growth potential in these regions.
Asia-Pacific markets are poised for a higher open, diverging from Wall Street's decline, as investors digest Japan's household spending data. In October, spending rose 2.9% month-on-month, surpassing expectations, while year-over-year spending fell 1.3%, also better than anticipated. Japan's Nikkei 225 futures indicate a positive start, while Australia's S&P/ASX 200 opened lower.
Base salaries for regular workers in Japan rose by a record 2.8% in October, marking the largest increase since 1994, according to the labor ministry. This rise in pay signals progress towards a positive economic cycle and fuels speculation of a potential near-term rate hike by the Bank of Japan. Real cash earnings remained stable, avoiding a decline for the first time in three months.
The long-standing belief that a weak yen benefits Japanese stocks is fading as the correlation weakens amid differing global monetary policies. Since a significant drop in summer, the Topix index has remained stagnant, despite the yen fluctuating between a 14-month high and a near 38-year low.
The US stock market, representing over 60% of global capitalisation, shows significant overvaluation, with the Buffett indicator at 208% and a CAPE ratio of 31.12. In contrast, European equities, particularly in the UK and Germany, offer more attractive valuations, while Japan presents mixed signals amid ongoing reforms. Investors are encouraged to diversify geographically to optimise risk-adjusted returns.
India's GDP growth slowed to 5.4% for the quarter ending September, the lowest in seven quarters and below the expected 6.5%, driven by reduced urban consumption and rising inflation, particularly in vegetable prices. Despite this, the Nifty 50 index has risen 13.7% this year, and analysts predict a gradual slowdown in growth, with forecasts around 6% for 2025. Concerns remain about investment activity and credit growth, highlighting the need for policy action to mitigate risks.
Edwards Lifesciences Corporation focuses on designing, manufacturing, and marketing medical systems and devices for cardiovascular disease treatment. Their product sales are primarily from heart valves and cardiac surgery products (67.9%), followed by hemodynamic monitoring systems (15.5%) and other devices (16.6%). Geographically, 58.4% of sales occur in the United States, with Europe at 22.2%, Japan at 7.6%, and other regions at 11.8%.
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