Anticipations that the U.S.-China trade war will eventually ease should help Japanese stocks recover by end-December to show an increase of 6 percent from last week’s closing level, a news agency poll found.
Median approximations from 28 analysts and fund managers polled in the previous week put the Nikkei benchmark at 22,375 by the year-end.
Predictions ranged from 19,500 to 25,000, or a drop of percent to an 18 percent gain from where it closed a week ago at 21,117.
Trade spat between United States and China worries that could ruin worldwide development have injured stocks this month, with chip-related stocks maltreated by Washington’s blacklisting of Chinese giant tech Huawei.
However, a majority of market players anticipate U.S. President Donald Trump and Chinese leader Xi Jinping will range a deal eventually.
“Trump is giving China a difficult time, but the market thinks that he would not push China too far to the point where his own economy slides into a correction,” said Hiroyuki Fukunaga, chief executive of Investrust, who predictions the Nikkei to trade at 24,500 in December.
“It looks like we are seeing the worst now, so the market expects that it will only become better from now on,” he said.
According to Takashi Ito, an equity market strategies, noted that not all businesses are affected by the trade spat and Japanese earnings are not anticipated to weaken sharply.
Ito estimates the Nikkei’s earnings per share to be around 1,750 yen for the year ending March 2020, which would be slightly changed from recent levels. He anticipates the Nikkei to end the year at 22,500, marking an upsurge of 7 percent from last week’s close.
Analysts said, even if a deal to end the trade war between United State and China reached next month, just how unharmed the U.S. economy emerges from the trade spat remains a big risk for the worldwide economy and the share market.
“Although I expect the U.S. and China will reach an agreement at the G20 in June, the global economy is seeing a slowdown and it’s highly possible that the Japanese stock market will enter a downward trend,” said Fumio Matsumoto, senior fund manager at Dalton Capital Japan.
Matsumoto anticipates the Nikkei to trade at 20,000 at the year end, a drop of 5 percent hence, before it will upsurge to 22,000 in June next year.
Market spectators say a different key focus is whether the government will begin with a sales tax hike planned in October and its effect on consumption.
A news agency reported on Friday Japanese Prime Minister Shinzo Abe said he was “basically” not considering looking for voter consent with a sudden election if the government were to deferral a planned sales tax hike.