Recovery of the second largest economy has begun to take hold

Why invest in the Japanese equity market?

Japan is the world's second largest economy and the largest creditor nation. After ten years of stagflation, an economic recovery has begun to take hold, driven by regional growth, a consistently weak yen, and most importantly significant structural reforms which will improve financial transparency and rationality. Efforts in the past decade to improve corporate balance sheets and reduce corporate structural inefficiencies have finally produced a healthy overall starting point from which to grow. Furthermore, Japanese reflation is no longer a hope but a seeming certainty which should finally lift domestic demand and long term economic growth. With the possibility of capital rationalization from such sources as a privatized postal savings system, and as dividend yields continue to outpace government bond yields relative to other economies globally, the argument for a much higher equity index level seems solid.

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