In this article, we discuss 10 best Japanese stocks to invest in 2022.
Japan has the lowest inflation rate among the major economies of the world, but stagnating wages and a weaker yen continue to pressure the economy. According to a report by the World Economic Forum, the consumer price index rose 2.8% in Japan during the month of August. This compared favorably to the rises in the United States and Europe during the same period, which stood at around 8.3% and 9.1%, respectively. A large-scale monetary easing policy by the central bank in Japan is one of the reasons behind this performance.
However, despite the relatively better performance, there are still some causes for concern. One of these is related to price hikes in a society that has not experienced violent fluctuations in prices for decades. In the past few months, infrastructure costs, such as electricity and gas rates, have increased by more than 20%, and food prices have risen by around 10%. Some of the top stocks to benefit from this hike include Sony Group Corporation (NYSE:SONY), Honda Motor Co., Ltd. (NYSE:HMC), and Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG).
Although the Japanese economy is not yet in a recession, there are signs it could sink into it. The country posted a small 0.1% increase in gross domestic product (GDP) in the first quarter of 2022, suggesting that an economic slowdown was on the horizon. But easing Covid restrictions spurred capital expenditure in the second quarter of the year, and the GDP recovered to post a 0.9% growth. Although the economy is recovering from the pandemic, it is still 2.3% below peak levels seen in the second quarter of 2018.
Per Nikkei Asia, a weakening yen is also threatening the Japanese economy. In dollar terms, the average wage of workers in Japan has fallen by nearly 40%. This has led to a decrease in the number of foreign workers that travel to the Asian nation for work in the construction and nursing care industries, two important pillars of the Japanese economy. However, analysts believe the positives far outweigh the negatives for the Japanese economy that is poised to make a comeback in late 2022.
Michael Wolf, a research analyst for Deloitte, said in a research note in July that Japan’s economic recovery was likely strengthening as pent-up demand pushes consumer spending higher. The analyst added, however, that inflation was outstripping wage gains, raising the risk that the rise in consumer spending may be short-lived. Wolf was of the opinion that the trade balance was also likely to improve as tourism returns and China comes out of lockdowns, but a weakening global economy likely presented a serious risk to external demand.
Similarly, ING senior economist Min Joo Kang said in a September research note that:
“The latest data releases from Japan point to a solid recovery in the near future and are a positive sign for the wage growth that the Bank of Japan is seeking. Japan is reopening its economy at a slower pace than other Asian countries and the reopening effects are just kicking in, which should be the main driver for the positive outlook for the second half of the year.”
Our Methodology
The companies that have deep links with the Japanese economy were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
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Best Japanese Stocks to Invest in 2022
10. MEDIROM Healthcare Technologies Inc. (NASDAQ:MRM)
Number of Hedge Fund Holders: N/A
MEDIROM Healthcare Technologies Inc. (NASDAQ:MRM) provides holistic healthcare services in Japan. It is one of the best Japanese stocks to invest in. The firm owns and runs more than 300 branded salons that offer services such as finger-pressure style bodywork therapy, stretch therapy, and posture and joint alignment, as well as physical therapy elements and various individual services, including anti-fatigue therapy, athletic support therapy, slim-down therapy, and reflexology. The firm is based in Tokyo and was founded in 2000.
On August 24, investment advisory Daiwa upgraded Mizuho Financial Group, Inc. (NYSE:MFG) stock to Outperform from Neutral with a 1,700 yen price target. Analyst Akira Takai issued the ratings update.
Just like Sony Group Corporation (NYSE:SONY), Honda Motor Co., Ltd. (NYSE:HMC), and Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG), MEDIROM Healthcare Technologies Inc. (NASDAQ:MRM) is one of the best Japanese stocks to buy now.
9. ORIX Corporation (NYSE:IX)
Number of Hedge Fund Holders: 6
ORIX Corporation (NYSE:IX) provides diversified financial services in Japan, the Americas, Asia, Europe, Australasia, the Middle East, and internationally. It is one of the top Japanese stocks to invest in. On October 11, ORIX Corporation (NYSE:IX) was among a group of companies led by investment group Japan Industrial Partners that were granted bidder status by electronics giant Toshiba. The group, which includes Chubu Electric Power, is seeking to acquire Toshiba. ORIX was previously known as Orient Leasing.
In addition to finance, ORIX Corporation (NYSE:IX) has interests in insurance, environment, and energy-related products and services. The company is based in Tokyo and was founded in 1950. It employs over 32,000 people.
At the end of the second quarter of 2022, 6 hedge funds in the database of Insider Monkey held stakes worth $10.4 million in ORIX Corporation (NYSE:IX), compared to 4 in the preceding quarter worth $9.2 million.
8. Mizuho Financial Group, Inc. (NYSE:MFG)
Number of Hedge Fund Holders: 7
Mizuho Financial Group, Inc. (NYSE:MFG) engages in banking, trust, securities, and other businesses related to financial services. It is one of the premier Japanese stocks to invest in. On October 6, media reports suggested that the firm was in talks with the Rakuten Group to acquire a stake in the e-commerce giant’s securities unit. The banking firm intends to buy a 20% stake in Rakuten Securities for $554 million.
On July 29, Mizuho Financial Group, Inc. (NYSE:MFG) posted earnings for the first fiscal quarter, reporting earnings per share of ¥62.85 and an ordinary income of ¥1.24 trillion, up over 67.6% compared to the same period last year. The banking group maintained its full-year net profit forecast at ¥540 billion, compared to the average analyst estimate of ¥550.60 billion.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Mizuho Financial Group, Inc. (NYSE:MFG), with 2.2 million shares worth more than $4.9 million.
At the end of the second quarter of 2022, 7 hedge funds in the database of Insider Monkey held stakes worth $8 million in Mizuho Financial Group, Inc. (NYSE:MFG), compared to 8 in the preceding quarter worth $10 million.
7. Nomura Holdings, Inc. (NYSE:NMR)
Number of Hedge Fund Holders: 7
Nomura Holdings, Inc. (NYSE:NMR) provides various financial services to individuals, corporations, financial institutions, governments, and governmental agencies worldwide. It is one of the major Japanese stocks to invest in. On October 6, the global investment banking chief of Nomura Holdings, Inc. (NYSE:NMR) said that the firm was planning to hire more bankers to strengthen its sustainable financing business in prediction of a rush in demand for decarbonisation related funding.
At the end of the second quarter of 2022, 7 hedge funds in the database of Insider Monkey held stakes worth $12.6 million in Nomura Holdings, Inc. (NYSE:NMR), compared to 9 in the preceding quarter worth $15 million.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Nomura Holdings, Inc. (NYSE:NMR), with 2.4 million shares worth more than $8.9 million.
6. Canon Inc. (NYSE:CAJ)
Number of Hedge Fund Holders: 8
Canon Inc. (NYSE:CAJ) manufactures and sells office multifunction devices (MFDs), plain paper copying machines, laser and inkjet printers, cameras, diagnostic equipment, and lithography equipment. It is one of the elite Japanese stocks to invest in. On October 10, the firm announced that it planned to display a range of innovative printing solutions, large format technology, and high value print as a part of PRINTING United Expo to be held at the Las Vegas convention center.
Some of the print-related solutions that Canon Inc. (NYSE:CAJ) sells include document solutions, laser multifunction printers, laser printers, inkjet printers, image scanners, calculators, digital continuous feed presses, digital sheet-fed presses, and large format printers.
At the end of the second quarter of 2022, 8 hedge funds in the database of Insider Monkey held stakes worth $51.6 million in Canon Inc. (NYSE:CAJ), compared to 8 the preceding quarter worth $63.5 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Canon Inc. (NYSE:CAJ), with 1.4 million shares worth more than $32 million.
In addition to Sony Group Corporation (NYSE:SONY), Honda Motor Co., Ltd. (NYSE:HMC), and Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG), Canon Inc. (NYSE:CAJ) is one of the best Japanese stocks to buy now.
5. Takeda Pharmaceutical Company Limited (NYSE:TAK)
Number of Hedge Fund Holders: 11
Takeda Pharmaceutical Company Limited (NYSE:TAK) engages in the research, development, manufacture, marketing, and out-licensing of pharmaceutical products. It is one of the best Japanese stocks to invest in. On October 5, the firm announced that the FDA had accepted their supplemental biologics license application for the potential expanded use of its Takhzyro injection for treatment of attacks from hereditary angioedema in children from age 2 to 12.
On July 19, Cowen analyst Ken Cacciatore upgraded Takeda Pharmaceutical Company Limited (NYSE:TAQ) stock to Outperform from Market Perform with a price target of $24, up from $21, noting that current level of the shares provides attractive value.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Takeda Pharmaceutical Company Limited (NYSE:TAK), with 2.8 million shares worth more than $39.7 million.
4. Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG)
Number of Hedge Fund Holders: 12
Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) provides commercial banking, leasing, securities, consumer finance, and other services. It is one of the top Japanese stocks to invest in. On October 7, the financial regulator in Japan told the banking firm to devise measures to improve compliance after banking and securities arms were found to have violated intra group firewall rules.
Among the hedge funds being tracked by Insider Monkey, Quebec-based investment firm Ramius is a leading shareholder in Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG), with 9.9 million shares worth more than $58.5 million.
3. Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG)
Number of Hedge Fund Holders: 12
Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) operates as the bank holding company for MUFG Bank, Ltd. that provides various financial services. It is one of the major Japanese stocks to invest in. On September 19, the firm announced that it had entered into a deal with US Bancorp to exercise the right under purchase agreement for US Bank’s acquisition of Mitsubishi UFJ Financial Group Union Bank’s core regional banking franchise to extend the termination date to December 31, 2022.
At the end of the second quarter of 2022, 12 hedge funds in the database of Insider Monkey held stakes worth $22.8 million in Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG), compared to 12 in the previous quarter worth $37 million.
2. Honda Motor Co., Ltd. (NYSE:HMC)
Number of Hedge Fund Holders: 14
Honda Motor Co., Ltd. (NYSE:HMC) develops, manufactures, and distributes motorcycles, automobiles, and power products globally. It is one of the elite Japanese stocks to invest in. On October 11, the firm announced that it would partner with LG Energy Solution to invest $3.5 billion in a new joint venture battery plant in Fayette, Ohio. According to the companies, this joint venture will create 2,200 jobs pending final government approvals.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Fisher Asset Management is a leading shareholder in Honda Motor Co., Ltd. (NYSE:HMC), with 8.8 million shares worth more than $213 million.
1. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 26
Sony Group Corporation (NYSE:SONY) develops, produces, and sells electronic equipment, instruments, and devices. It is one of the premier Japanese stocks to invest in. On September 7, Goldman Sachs analyst Minami Munakata resumed coverage of Sony Group Corporation (NYSE:SONY) stock with a Neutral rating and a 12,200 yen price target, noting that the company’s near-term earnings will level off.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm GAMCO Investors is a leading shareholder in Sony Group Corporation (NYSE:SONY), with 1.8 million shares worth more than $146.5 million.
In its Q1 2022 investor letter, Aristotle Capital Management, an asset management firm, highlighted a few stocks and Sony Group Corporation (NYSE:SONY) was one of them. Here is what the fund said:
“Sony, maker of the PlayStation videogame console, was a leading detractor for the quarter. After a strong year in 2021, a shortfall in PlayStation 5 sales due to continued semiconductor shortages has dampened new console unit sales. Although there are likely to be continued limitations on the supply of components in the short term, consumer demand remains strong, and upcoming releases of major titles such as Horizon Forbidden West and Gran Turismo 7 are likely to further enhance demand. While Sony continues to manage supply-chain headwinds, the company has also again demonstrated its ability to build on the fundamental strength of its business across various segments. During the quarter, Sony acquired Bungie, a U.S.-based videogame developer known for the Destiny franchise and live game services; completed its initial equity investment in Japan Advanced Semiconductor Manufacturing, a foundry service subsidiary of Taiwan Semiconductor Manufacturing Company (TSMC); and acquired Brazilian music label Som Livre. Lastly, Sony announced a partnership with Honda Motor (NYSE:HMC) where the two companies expect to combine Honda’s expertise in manufacturing vehicles with Sony’s proficiency in imaging, sensing, telecommunication and network technologies to develop and commercialize electric vehicles. We feel these strategic actions demonstrate Sony’s ability to continue to improve on its market positions across its business segments with a long-term, forward-looking approach.”
You can also take a peek at 10 Best Stocks to Buy According to Angela Aldrich’s Bayberry Capital Partners and Top 10 Tech Stocks to Buy According to Billionaire Louis Bacon.
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Disclosure. None. 10 Best Japanese Stocks to Invest in 2022 is originally published on Insider Monkey.
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