In a report issued earlier this week, Nomura analysts Hisao Matsuura, Masaki Motomura and Kiichi Fujita look into a few stocks with low Greece and China exposure amid this period of external instability.

The Context

The Nikkei 225 Index continues to fall in July, and now stands below the 20,000 mark, as the Chinese crisis continues to impact on the Japanese equity market. As the Chinese government tries to come up with initiatives to counter the recent tumble in its stock market (until now, with no significant success), Chinese tourists continue to -- unexpectedly -- bolster inbound demand in Japan.

“The Greek debt crisis is also dragging on,” the analysts add. After the Greek population decided to vote against the terms of the bailout plan proposed by the European Union, negotiations have restarted. However, “with such a large gap between the two sides [Greece and the EU], we think a rapid compromise is unlikely,” the experts add.

So, amid no prospects of a rapid resolution of the Greek situation and plenty of uncertainty surrounding the Chinese crisis, Nomura lists 22 Japanese stocks that seem relatively shielded from risk deriving from both China and Greece.

The Stocks

The analysts look for large Japanese stocks that are “negatively correlated to the past 60-day yield on the 2-yr Greek bond and the Shanghai Composite Index” (ex-forex rates). Take a look below.

Source: Nomura, based on Bloomberg data

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