BofAML's Yamada Remains Bearish on Japan Equities Heading Into 2019

The video discusses the outlook for Japanese markets, highlighting a defensive stance on equities due to potential export slowdowns and election risks. It examines business sentiment and capital expenditure trends, noting external factors like global trade tensions. Strategies for equity allocations are explored, emphasizing defensive sectors. The Tank on survey results show better-than-expected indices, with CapEx trends indicating structural investments in new technologies. Challenges such as demographic constraints and labor shortages are addressed, with a focus on how trade wars may impact economic activities.

What are the main reasons for adopting a defensive stance on Japanese equities?

• High inventory levels and election risks

• Strong domestic demand and low inflation

• Rising global interest rates and currency appreciation

• Increased foreign investments and trade surplus

What is causing the revision down in CapEx spending plans among large manufacturers in Japan?

• Increased government regulations and taxes

• Lack of confidence in Abenomics and global trade tensions

• Rising domestic inflation and interest rates

• Strong yen and declining export demand

Which sectors tend to outperform during periods of increased equity volatility?

• Defensive and domestic sectors

• Technology and financial sectors

• Export-oriented and industrial sectors

• Energy and raw materials sectors

What was the Large Manufacturer Index value in the latest Tankan survey?

• 21

• 24

• 19

• 18

How have Japanese companies responded to labor shortages according to the final section?

• By outsourcing labor to other countries

• By reducing production and exports

• By increasing wages and benefits

• By investing in new technologies and facilities

What is the expected impact of the trade war and export slowdown on CapEx activities?

• It may negatively impact CapEx activities

• It will have no impact on CapEx activities

• It will lead to a complete halt in CapEx activities

• It will likely boost CapEx activities

What has been the trend in CapEx spending by Japanese companies over the past years?

• Increasing, especially in new technologies and facilities

• Stable with no significant changes

• Fluctuating with no clear pattern

• Decreasing due to economic uncertainty