Summary
When an equity market rises more than 20% in 8 months, investors take notice. But after such a strong rally, investors may also wonder how much return potential is left. So it is this year with Japan, where the Tokyo Price Index (TOPIX) gained more than 23% through August.
In our view, Japan remains one of the most attractive opportunities for equity investors—and the arguments for a positive medium- and long-term view have become even stronger over the past year. Deflation has finally given way to modest inflation, valuations remain attractive, and we see the corporate reforms that began more than a decade ago starting to bear fruit (see chart).
Long-Term Trend of Buybacks and Increasing Dividends in Japan
As of 30 June 2023
Source: Bloomberg
Important Information
Published on 24 August 2023.
TOPIX is a free-float adjusted market capitalization-weighted index that is calculated based on all the domestic common stocks listed on the TSE First Section. TOPIX shows the measure of current market capitalization assuming that market capitalization as of the base date (January 4,1968) is 100 points. This is a measure of the overall trend in the stock market, and is used as a benchmark for investment in Japan stocks. The index is unmanaged and has no fees. One cannot invest directly in an index.
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