Factors such as persistent yen depreciation and short-term, stimulus-oriented fiscal measures have historically played a significant role in shaping valuations and investment styles in Japanese equities. However, signs are emerging that these structural premises are gradually changing.
For much of the past decade, emerging markets (EM) were viewed primarily as a high-beta extension of global growth. Allocators tended to treat the asset class as cyclical exposure, sensitive to dollar strength, commodity swings, and Federal Reserve policy shifts.
“The market response to the Middle East crisis has been driven chiefly by concerns about inflation. This episode reaffirms our view that investors should remain diversified and maintain multiple layers of resilience and quality within portfolios.”