Goldman Sachs' Chief Japan Equity Strategist, Bruce Kirk, suggests that the current yen to dollar exchange rate is favorable for overseas investors purchasing Japanese stocks. He believes the risk of the exchange rate dropping below the 160 mark is limited, as it might trigger intervention by Japanese authorities. The yen was trading around 157.13 per dollar in the Tokyo market, offering a "sweet spot" for foreign funds to buy Japanese stocks at relatively low prices, mitigating potential depreciation impacts on their dollar value.
While Japan's stock market has largely recovered since its August slump, many overseas funds remain cautious. Their return could provide the necessary boost for the Tokyo Stock Price Index (TOPIX) to reach its peak by 2025. Goldman Sachs has set a 12-month target for the TOPIX at 3,100 points, while UBS Securities Japan and JPMorgan have targets of 2,900 and 3,000 points, respectively.
