Strategists skip ageing US market but have a yen for Japan's bullish scenario

Sydney

STRATEGISTS are coming around to the idea that Japan is the place to be in 2017, with Morgan Stanley the latest to embrace one of the year's biggest comeback stories at the expense of America's ageing bull market. Morgan Stanley joins Japan's largest brokerage Nomura Holdings Inc in saying that the country's bull run will continue into 2017 and recommends selling US shares to fund the trade. It's a dramatic turnaround after investors fled one of the worst performing markets earlier this year as traders lost faith in Abenomics. The Topix index has rallied for a 12th straight day to the highest level since January.

"The gains in a plausible bull case look larger than before, fuelled by the prospect of fiscal expansion, rising earnings and a return of true animal spirits," according to a 43-page report dated Nov 27 from the US bank's cross-asset strategy team led by Andrew Sheets. It's that time of year when investors and analysts dust off their crystal balls and prognosticate on the direction of a multitude of securities. Japan's Topix may climb as much as 24 per cent in 2017 as earnings-per-share expands faster than any other region in the world, according to Mr Sheets. Norikazu Akedo, a senior managing director at Nomura's brokerage unit, predicts the Nikkei 225 Stock Average will rise as much as 14 per cent above Friday's close of 18,381.22.