Japan is one of the most developed economies in Asia with a highly skilled workforce and advanced infrastructure. The country has seen a long period of recession since its property bubble burst in the early 1990s. However, it has been able to maintain its position as third largest economy in the world by outpacing Germany and outperforming other developed countries that were hit hard by the global financial crisis such as Italy and France. Japan is also one of the world's largest exporters of goods and services. Its main exports include transportation equipment, motor vehicles and parts, electrical machinery, semiconductors and scientific instruments.

Explanation:

Leading Economic Indicators:

Manufacturing Orders:

• Japan's hardware production has been increasing steadily in the last year. According to The Japan Times, orders for manufactured goods rose 6.4% in July of 2019, up from a 3.3% increase in June. This is the second straight month that orders have increased and this bodes well for Japan as companies are actively ordering new products and materials.1 This also shows that demand for Japanese products is high as more companies are ordering more goods which is good news for Japan economically.

Housing Starts:

• In June of 2019, housing starts in Japan increased 2.8% according to statistics released by the Ministry of Land, Infrastructure, Transport and Tourism. This is the third consecutive month that housing starts have increased which shows that there is an increased demand for housing in Japan.2 This is good news as it indicates a recovering economy and also means that more people are earning enough income to afford home ownership which will help boost employment and economic growth in the future as well.
• Overall, these factors imply that Japan may not be a favorable venture during the next 12 months. Investing in Japan may be an excellent idea for the next 12 months, since home starts are growing month after month and inventory levels have been adjusted. The country boasts a low unemployment rate and a low inflation rate, making it an appealing investment location. 

Based on your economic and industry analysis above, choose two stocks domiciled in JAPAN which you think are good investments. 

Briefly explain why these stocks will go up in price over the next 12-18 months. Be specific with your reasons, including valuation support.