Richard Kaye, Analyst and Portfolio manager, at Comgest tells "Worldwide Exchange" the U.S.-Japan trade deal boosts tech and ag sectors, and Japan's strengthening yen could attract more U.S. investor interest.

Washington

A new trade agreement between Japan and the United States will reduce tariffs, allowing Japanese technology—including semiconductors, software, and medical innovations—to enter the U.S. market with fewer barriers. The deal also opens opportunities for U.S. agricultural exports, particularly rice, and strengthens cooperation in aerospace, benefiting companies like Boeing.

The agreement is expected to have a significant impact on both economies, with U.S. investors viewing Japan as a more attractive market due to a stabilizing yen. The deal is anticipated to foster a more flexible economic relationship between the two countries and encourage investment flows in both directions.

Kaye: Japan’s tech can now reach the U.S. without excessive tariffs

What's your initial take on this deal. First what does it mean for the U.S. markets this deal. What sectors what areas of this market do you see benefit. I think it's a great deal for both countries. And the reason is that Japan's got a lot of fantastic technology that it can offer to the U.S. in areas like semiconductor fabrication software even some medical technology where Japan has certain diseases specific to the aging society where it can offer a fantastic technology to the U.S. and it will now be able to do that without the risk of excessive tariffs. Of course it's a great deal for the Japanese as well in specific industries where they have a great relationship with with with the U.S. markets. So it cuts tariffs in half down to 15 percent right now. You mentioned chips and you mentioned some other parts. What about the other side of the coin. The fact that we have a better trade deal. Rice is one of the things mentioned also Boeing jets. What other companies or sectors here in the U.S. do you see being beneficiary of exporting to Japan on the back of this deal. Rice and agriculture I think is a huge thing. And I think it's very important to recognize that they waited until the recent election in Japan. There's an election in Japan at the weekend. They wait till that election was done before they announced the trade deal. Why. Because farmers are a massive voting bloc. And obviously rice imports are electrically controversial topic. But the fact that they've been able to do that rice import agreements now by a lot of I think U.S. rice and agricultural products is a major opportunity for the U.S. and also a very important opportunity for Japan. I live in Japan. Obviously rice is a huge staple here. There's a massive shortage of rice because of the aging population of farmers. Rice has been very protected. If Japan opens that market it's very important for the Japanese consumer. Very important for U.S. agriculture. And I think it means a much more flexible relationship between the between the two countries over time. You mentioned Boeing real quick as well. And that's that's a huge opportunity as well because Japan's obviously hugely dependent on U.S. aerospace technology. Japan also works with Boeing very closely and things like carbon fiber supply. Many of the sensors and motors that are used in aircraft design. And I think a close relationship with with Boeing will be extremely important for Japan. So that's meant to the companies as well as the U.S. itself. So commodity benefits stock benefit. I want to go to the currency very quickly. I'm looking at the chart here. We saw yen futures kind of move to the upside. More broadly what is this increase in the yen. What does this mean for potentially investing in Japan. Do you think this makes Japan more attractive to global investors and specifically Japanese investors. And does that take money away from the U.S. markets. Actually my answer is yes on all of those points. I think that a stabilizing yen a rising yen actually is a very attractive opportunity for U.S. investors because a lot of people have been scared Japan because it's had a record drop in its currency over the last three years. You might be able to make money on the stocks but you'd lose it back again on the currency. If that's all changing now with the normalizing and strengthening yen. There's a very exciting opportunity for U.S. investors to look at this market. You mentioned just the domestic Japanese investors. One of the biggest investor bases in the world that has got a lot an awful lot of cash exposure right now. Of course that their domestic markets with a stabilizing currency will be very attractive to them. I want to say one other thing just real quick on that. You mentioned on your reporting how the auto stocks are up in Europe and so on. They've been up in Japan as well today. But obviously the euros the euro stocks will be benefiting from a cheap currency. And it's been a very big concentration in the market on on cheap currency plays in the last two years.

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