Japanese equities continued their strong performance in 2024, reaching their highest levels in 34 years. The recent trend has also benefitted technology shares supported by a solid economic outlook.
This positive trend in Japanese equities is driven by three main factors. Firstly, the Tokyo Stock Exchange has encouraged companies to improve their capital efficiency. Secondly, the profit recovery which equities are undergoing and the fall in the Yen vs the US dollar have supported this trend so far. The third element is the end of deflation. Wage negotiations in the spring are expected to lead to wage rises, further confirming this trend.
“For international investors the Japanese equity market remains an attractive tactical opportunity supported by the ongoing recovery in profit and corporate reforms.”
- The positive trend in the Japanese market is attracting foreign investor flows, amid expectations of further profit recovery.
- Wage negotiations in the spring are expected to lead to wage rises, further helping the country come out of deflation.
- Yen dynamics and Bank of Japan actions are key elements to watch. We expect a gradual normalisation of monetary policy.
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