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Shusuke Yamada, the Chief Foreign-Exchange and Equity Strategist in Tokyo at Bank of America Merrill Lynch   (BAML) said in his latest report, a gauge of fund manager demand for Japanese equities slid this month to the lowest since November 2016.

Key Quotes:

“Due to concerns about the outlook for earnings. The Topix index’s 8.2 per cent rebound this year lags the performances of other developed markets.

There aren’t a lot of investors holding Japanese equities.

In terms of global money flow, it won’t be strange for funds to head to Japan, but the fundamentals aren’t good.

Given the lack of investors holding Japanese equities, a lot of buying could kick in with the right trigger.

It’s not as if the China numbers are starting to get extremely good but it’s better than what people had thought. There’s room for buying positions to be filled” in Japanese equities.

A survey in the BAML report showed investor demand for Japanese equities is at the weakest in more than two years.”