×

Land of the rising stocks? Japan may emerge as a pick this year

Investors may want to explore Japanese stocks this year, one strategist says.

The weekend meetings between President Donald Trump and Japanese Prime Minister Shinzo Abe went smoothly, Reuters reported Monday. Trump reportedly avoided repeating rhetoric accusing Japan of taking advantage of U.S. security aid and taking American jobs. Currency issues also were not discussed, according to reports.

As a country for investors, Japan looks attractive, said Matt Maley, managing director and equity strategist at Miller Tabak.

"One of our best technical calls last year was a bullish one on Japan's Nikkei ... after it made a nice "double-bottom" at 15,000. It pulled back recently, but it was able to hold its [50-day moving average]. If it can break above its recent highs (of 19,600), it could run quickly to its 2015 highs ... which are 8% above current levels," Maley wrote in an e-mail to CNBC on Friday.

Maley said he's not as bullish on the stocks as he was last summer, but should the yen weaken further against the U.S. dollar, as it did Friday, the Nikkei should see "another leg higher."

The Nikkei ended the week up 2.44 percent for its best week since Dec. 9 when the index gained 3.1 percent that week.

On the other hand, Japan's economy sees what Riedel Research Group's David Riedel calls a "fundamental flaw": its population is "hugely aged," which makes growth difficult.

Indeed, Abe said Sunday, shortly after meeting with Trump, that addressing Japan's aging population and "respect for diversity" is a priority, along with boosting the role of women in society.

In terms of Asian markets, Riedel looks to India as his top pick.

"Historically separated from global trade, India has emerged as a strong center of growth in recent years," Riedel wrote to CNBC in an e-mail. "Political changes and a long-term plan for a society more connected to Delhi, less corrupt and more tied to a formalized banking and tax system has the chance to surprise investors in the medium and longer-term."

Specifically, he recommends that investors look to exchange-traded funds in the space like the MSCI All India ETF (INDA) and the iShares MSCI India Small Cap ETF (SMIN).

As for other Asian markets, Maley also likes India for investment opportunities at these levels, or Indonesia.

"Indonesia is a very domestic driven economy, so it would be less impacted by a trade war," Maley wrote.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

Read more

Connect