Japan: the Land of the Rising Stocks

The Japanese equity market is the 3rd largest in the world and responds to global economic conditions more sensitively than other developed markets. Many international investors still associate investing in Japanese equities with “Japan lost decade “ and the narrative of Japan as a country with no growth and a stock market that chronically underperformed the US and even European equities. The coronavirus pandemic has done what seven years of Abenomics could not: push Japan’s Nikkei 225 benchmark above the 25,000 marks for the first time since 1991.

- Rainer Michael Preiss

Japanese stocks have already been outperforming global markets since September. The trend most probably will continue this year as the monetary and fiscal policy backdrop is “quite market-friendly” for Japanese stocks. According to Bloomberg data, Japanese companies are beating analysts’ earnings expectations by the widest margin in almost three years, adding to the appeal of local japan stocks when brokers are expecting a return of foreign investors. According to Bloomberg data, TSE 2 Tokyo Stock Exchange Topix 2nd sector index with+13.27% is the 5th best performing market in Asia year-to-date, at a time when Japan stocks are out-performing US equities. Increasingly global investors focus on the narrative that when the global economy keeps recovering, Japanese stocks might offer more reward than US stocks would.