UBS names the best and worst Japanese stocks to buy if the dollar-yen rises further

Published Wed, Apr 27 20228:27 PM EDT

UBS has identified Japanese stocks that are set to be most affected — both positively and negatively — if the yen continues to slide against the dollar. "The macro risk in Japan has remained consistently high since 2010," analysts at UBS wrote in a recent note. The dollar-yen has been a key risk driver throughout much of this period, they said. The Japanese yen has seen continued weakness against the dollar for weeks amid expectations of relatively slower monetary policy normalization in the country. With investors now becoming "increasingly concerned" over further weakness ahead for the Japanese currency, UBS has identified Japan stocks that would be in the best and worst positions for a 5% and 7% spike in the dollar-yen. The stocks were identified using UBS' "Macrosense" model, which the investment bank claims "dissects current market risks" to find stocks and sectors more exposed to macro factors. Oil firm Inpex is expected to be the biggest winner if a slide in the yen against the dollar continues. Here, UBS sees the stock rising as much as 3.6% if the yen weakens 7% against the greenback. Most of the biggest potential winners of a further slide in the yen against the dollar are from industrials. Japanese trading firm Marubeni is among the group, along with manufacturing firms Hitachi Construction Machinery , Mitsubishi Corporation and Komatsu . Other firms set to benefit from this trend include: Yamaha Motor , Ricoh , Mazda Motor , Idemitsu Kosan and Nippon Shinyaku . At the other end of the spectrum, UBS says shares of furniture firm Nitori Holdings may drop by as much as 4.1% if the yen declines 7% against the dollar. Consumer staples firms also make up half of the bottom 10 stocks, with UBS identifying Tsuruha Holdings , Kao Corporation , Toyo Suisan Kaisha , Nissin Foods and Lion Corporation . Commercial vehicle maker Hino Motors is among the other stocks that round out the list of expected worst performers, along with railway holding firm Kintetsu Group Holdings as well as manufacturers Koito Manufacturing and Hoya Corporation .

The dollar surged to a 24-year peak against the yen and a 37-year high versus sterling on Wednesday

Zhang Peng | LightRocket | Getty Images

UBS has identified Japanese stocks that are set to be most affected — both positively and negatively — if the yen continues to slide against the dollar.