The Japanese stockmarket has been one of the main beneficiaries of Donald Trump's surprising win in the US Presidential Election, leading to a sharp appreciation in the dollar and a weaker Japanese yen.
While the yen has strengthened somewhat in the beginning of the year, the greenback is likely to remain strong in 2017 with interest rate differentials widening on rising inflationary expectations in the US. Despite the nice run for Japanese equities over the past few months, valuations for Japan are still looking reasonable with the Topix trading at 14x forward earnings, below the mid-point of its five-year range. In fact, there could be further upside potential as the weaker yen since President Trump's win is just starting to be factored into Japanese corporate earnings expectation...
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