Despite Japan falling into recession, 2024 will be the year global investors “rediscover” and pile back into Japanese stocks, predicts the CEO of one of the world’s largest independent financial advisory and asset management organisations.
The bullish prediction from deVere Group’s Nigel Green comes as the Nikkei 225, Japan’s benchmark stock index, jumped 2% on Thursday, soaring to unprecedented heights and reaching 39,029, a significant leap that surpassed the previous record high set in 1989.
He comments: “The main driver of Japan’s stock market resurgence lies in the robust corporate earnings reported by major companies.
“Banking, electronics, and consumer stocks, in particular, have displayed stellar financial performances, instilling confidence in investors.
“The corporate sector’s ability to weather economic challenges and deliver strong earnings signals resilience and adaptability.”
A wave of optimism is sweeping through Japan’s equities market. The government’s commitment to implementing investor-friendly measures has played a crucial role in creating a favourable investment climate.
“Regulatory reforms aimed at streamlining procedures, reducing bureaucracy, and enhancing transparency are instilling confidence in foreign investors,” says Nigel Green.
“The removal of barriers and the promotion of a business-friendly environment contribute to the positive sentiment, making Japanese stocks an increasingly appealing choice for those seeking long-term growth.”
Another significant factor contributing to the resurgence of interest in Japanese stocks is the depreciation of the yen against the dollar.
The deVere CEO affirms: “The yen has weakened by approximately 6% against the dollar this year, and indications suggest that it is on track to drop to 33-year lows last seen in the late 20th century.
“This weakening currency is a double-edged sword that benefits Japanese exporters and, consequently, the overall economy.
“For global investors, a weaker yen enhances the competitiveness of Japanese products on the global stage, making investments in Japanese companies more attractive.”
Japan’s commitment to enhanced corporate governance is set to become a linchpin in attracting foreign investors.
“Tokyo’s proactive measures to improve transparency, accountability, and shareholder returns have created a business environment that instils confidence.
“The appointment of independent directors, improvements in disclosure practices, and aligning executive compensation with company performance demonstrate a commitment to responsible and sustainable business practices.
“Foreign investors, increasingly prioritising ethical and well-governed investments, are finding Japan’s corporate governance reforms ever-more appealing,” notes Nigel Green.
He concludes: “The combination of robust corporate earnings, investor-friendly measures, a weaker yen, and a commitment to improved corporate governance creates a compelling narrative for those considering investments in Japan.
“It seems that 2024 is set to be the year that global investors, recognising the unique and lucrative prospects offered by its resurgent stock market, rediscover and pile back into Japanese equities.”
