(Bloomberg) -- When everybody else is negative, it can pay to stay positive.
That's the view of Nomura Securities analysts Akihiro Murakami and Tomoyo Izumi, who wrote in a Sept. 7 research note that investors may eventually want to hold Japanese stocks with “substantial exposure” to the U.S.
Investors shouldn't just base their decisions on recent surveys that show pessimism is the dominant view on the U.S. stock outlook, Murakami and Izumi wrote. Instead, they should look at the OECD's Composite Leading Indicator, which moves ahead of survey results. Although the U.S. is in a slowdown phase, the rate of acceleration of its CLI is improving, according to the note.
While it's not yet time to “go full throttle,” the point at which investors should adopt the contrarian strategy may be approaching, the analysts wrote.
CLI's change for Asia is at about highest point, so Japanese stocks with “substantial exposure” to the region look attractive, they wrote. The rate of its acceleration for Asia may start to fall, however, as expectations keep rising over coming months.
Nitto Denko Corp., Astellas Pharma Inc., Komatsu Ltd., and Hitachi Construction Machinery Co. are top among Nomura's 40 candidates for holding long positions, according to the report. Of those, 18 companies have sales exposure to North America of 20 percent or more, including Toyota Motor Corp., NGK Spark Plug Co., Yamaha Motor Co., and Nintendo Co.
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net.
To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Naoto Hosoda, Jonathan Annells
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