In this article, we discuss 11 best Japanese stocks to buy in 2024. If you want to skip our discussion on the Japanese economy, head over to 5 Best Japanese Stocks To Buy In 2024.
Japan has effectively managed the challenges posed by the pandemic and the energy crisis. Despite facing headwinds from weak global growth, geopolitical tensions, and high inflation, the country has demonstrated resilience. According to a recent OECD report, to enhance the economy's ability to withstand shocks, adjustments to monetary policy settings have begun, and fiscal consolidation is emphasized due to high public debt. The focus on rebuilding fiscal buffers involves implementing a credible medium-term fiscal framework to reduce the debt-to-GDP ratio. The Japanese economy relies on domestic demand as global uncertainty affects external demand. A tight labor market is expected to contribute to higher wage growth in 2024-25. Rising wages, government subsidies, and a new fiscal package are anticipated to support private consumption and investment. External risks include the global economic outlook, geopolitical tensions, and supply-side constraints, while potential upside factors involve stronger-than-expected recovery in tourism and domestic consumption.
Japan is considered to be at a turning point with inflation likely to settle around the 2% target. Consumer price inflation, excluding fresh foods, has exceeded the target since April 2022. Recent positive outcomes in annual wage negotiations contribute to a virtuous cycle of redistribution and growth, signaling a move towards monetary policy normalization, as per OECD. Projections indicate headline and core consumer price inflation of around 2% in 2024-25 as government subsidies end, the output gap closes, and wage growth gains traction. While banks appear resilient in the near term, potential vulnerabilities need monitoring, including the phase-out of emergency support measures, increased foreign interest rate and loan risks, a high share of floating-rate housing loans, and rising debt-to-income ratios. Continued policies to support mergers and improve business models of regional banks, especially in the face of demographic challenges, are recommended.
On the other hand, the Bank of Japan is expected to end its negative interest rate policy in the upcoming spring. Despite pressure on BOJ Governor Kazuo Ueda to address yen depreciation driven by the gap between high U.S. interest rates and Japan's accommodative policy, he faces constraints due to high inflation that policymakers see as unsustainable. The unexpected economic contraction has pushed Japan to the world's fourth-largest economy, trailing behind Germany. The prolonged weakness of the yen has not only affected consumer purchasing power but has also diminished the value of the country's exports, contributing to a second consecutive GDP contraction in the fourth quarter of 2023. Sayuri Shirai, an economics professor at Keio University in Tokyo, told CNBC’s “Squawk Box Asia” in December 2023:
“So even if Bank of Japan raises interest rates a little bit, BOJ has to say they cannot do continuous interest rate hikes because the economy is weak. If they do some normalization, [it would be] just [the] removal of negative interest rates — then it doesn’t really have much impact on the depreciation of the yen.”
This article discusses some of the best Japanese stocks to buy in 2024, ranking them according to hedge fund interest. Some of the top stocks that made the list include Sony Group Corporation (NYSE:SONY), Takeda Pharmaceutical Company Limited (NYSE:TAK), and Toyota Motor Corporation (NYSE:TM).
Our Methodology
We chose the top Japanese stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 933 elite hedge funds tracked as of the end of the fourth quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
11 Best Japanese Stocks To Buy In 2024
A silhouette of a business executive overlooking the Japanese equity markets from a high-rise building.
Yoshitsu Co., Ltd (NASDAQ:TKLF) is a Japanese company that is engaged in the retail and wholesale of beauty, health, and household products. The company operates physical and online stores in Japan, Hong Kong, China, and Korea, as well as franchise stores in the United States, Canada, and the United Kingdom.
On January 26, Yoshitsu Co., Ltd (NASDAQ:TKLF) announced that it entered into securities purchase agreements with institutional investors. The agreements involve the issuance of 5.97 million American depositary shares (ADS) at a purchase price of $0.67 per ADS in a registered direct offering. The company anticipates gross proceeds of approximately $4 million from both transactions.
According to Insider Monkey’s fourth quarter database, 1 hedge fund was bullish on Yoshitsu Co., Ltd (NASDAQ:TKLF), compared to 2 in the prior quarter.
In addition to Sony Group Corporation (NYSE:SONY), Takeda Pharmaceutical Company Limited (NYSE:TAK), and Toyota Motor Corporation (NYSE:TM), Yoshitsu Co., Ltd (NASDAQ:TKLF) is one of the best Japanese stocks to monitor.
HeartCore Enterprises, Inc. (NASDAQ:HTCR) is a software development company offering software-as-a-service (SaaS) solutions globally. Their customer experience management platform encompasses marketing, sales, service, and content management systems. HeartCore Enterprises, Inc. (NASDAQ:HTCR) helps companies enhance customer experience and increase engagement. It is one of the best Japanese stocks to invest in.
On October 3, 2023, HeartCore Enterprises, Inc. (NASDAQ:HTCR) secured its eleventh Go IPO consulting service win through an agreement with Gates Group. Via this collaboration, HeartCore will support Gates Group in its initiative to go public and be listed on NASDAQ. As part of the agreement, HeartCore has been granted a warrant enabling the acquisition of 3% of Gates Group's common stock on a fully diluted basis.
According to Insider Monkey’s fourth quarter database, 2 hedge funds were long HeartCore Enterprises, Inc. (NASDAQ:HTCR), same as the prior quarter.
ORIX Corporation (NYSE:IX) is a Tokyo-based financial services company that operates globally. ORIX's business segments include Corporate Financial Services and Maintenance Leasing, Real Estate, PE Investment and Concession, Environment and Energy, Insurance, Banking and Credit, Aircraft and Ships, ORIX USA, ORIX Europe, and Asia and Australia. On February 7, ORIX Corporation (NYSE:IX) posted a 9-month GAAP EPS of ¥188.39 and a revenue of ¥2,037.9 billion, up 2% on a year-over-year basis.
According to Insider Monkey’s fourth quarter database, 5 hedge funds were bullish on ORIX Corporation (NYSE:IX), same as the prior quarter. Hoon Kim’s Quantinno Capital is the largest stakeholder of the company, with 17,195 shares worth $1.60 million.
Mizuho Financial Group, Inc. (NYSE:MFG) is engaged in financial services worldwide, including banking, trust, securities, and related businesses. The company operates through Retail & Business Banking, Corporate & Institutional Banking, Global Corporate, Global Markets, Asset Management, and Others segments. Mizuho Financial Group, Inc. (NYSE:MFG) is one of the best Japanese stocks to buy.
On January 30, Mizuho Americas, a division of Mizuho Financial Group, Inc. (NYSE:MFG), announced an investment in DirectBooks, a primary markets communications platform. As part of the investment, Mizuho will become a member of DirectBooks' board. DirectBooks aims to enhance capital markets by facilitating streamlined communication through structured deal data, documentation, and information exchange.
According to Insider Monkey’s fourth quarter database, 7 hedge funds held stakes in Mizuho Financial Group, Inc. (NYSE:MFG), compared to 9 in the prior quarter. Israel Englander’s Millennium Management is the leading stakeholder of the company, with a $4 million position.
Nomura Holdings, Inc. (NYSE:NMR) provides a range of financial services globally across three segments – Retail, Investment Management, and Wholesale. Additionally, it underwrites securities, offers financial advisory services, and participates in capital raising activities. Nomura Holdings, Inc. (NYSE:NMR) was founded in 1925 and it is headquartered in Tokyo, Japan. It is one of the best Japanese stocks to monitor. On February 1, Nomura Holdings, Inc. (NYSE:NMR) posted a 9-month GAAP EPS of ¥34.69 and a revenue of ¥2,986.54 billion, up 74% on a year-over-year basis.
According to Insider Monkey’s fourth quarter database, 9 hedge funds were long Nomura Holdings, Inc. (NYSE:NMR), compared to 7 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the biggest stakeholder of the company, with nearly 2 million shares worth $9 million.
Honda Motor Co., Ltd. (NYSE:HMC) is a global company involved in the development, manufacturing, and distribution of motorcycles, automobiles, and power products. The company was founded in 1946 and headquartered in Tokyo, Japan. On February 8, Honda Motor Co., Ltd. (NYSE:HMC) reported its financial results for the third quarter of fiscal 2024. The company announced a GAAP EPS of ¥52.04 and a revenue of ¥5390.1 billion, up 21.4% on a year-over-year basis.
According to Insider Monkey’s fourth quarter database, 12 hedge funds were bullish on Honda Motor Co., Ltd. (NYSE:HMC), compared to 10 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 9.67 million shares worth $299 million.
Like Sony Group Corporation (NYSE:SONY), Takeda Pharmaceutical Company Limited (NYSE:TAK), and Toyota Motor Corporation (NYSE:TM), Honda Motor Co., Ltd. (NYSE:HMC) is one of the best Japanese stocks, ranking 6th on our list.
ClearBridge International Value Strategy made the following comment about Honda Motor Co., Ltd. (NYSE:HMC) in its Q4 2022 investor letter:
“We elected to exit Honda Motor Co., Ltd. (NYSE:HMC), a manufacturer of cars, motorcycles, general-purpose engines, and a range of other power products in the consumer discretionary sector. The company has struggled to make progress in improving its recent mediocre sales trends while its current plan for transitioning to electric vehicles and motors is less compelling than its more transparent peers. Given the risk of the Japanese yen strengthening as yet another headwind to the company’s intermediate performance, we elected to close the position in favor of other opportunities.”
