Pro-growth economic policy making is poised to make a comeback in Japan over the coming six to eight weeks, in our view. With the controversial new security bill now largely in the rearview mirror, “Team Abe” will want to re-establish economic policy-making credentials as quickly as possible.
For economists, Japan and China appear like a match made in heaven. Where Japan is rich in capital and poor in labor, China’s situation is exactly the reverse. Putting the two together should yield a powerful growth machine. For investors, unfortunately, the Japan-China nexus poses significant complexities.
Japanese equities dropped 5.5% last week, for their sharpest weekly loss in over 15 months. The market is still up 11.8% year-to-date, and in our view, last week marks a healthy—and overdue—correction. The multi-year bull market for Japanese risk assets—equities and real estate—remains intact.
I recently visited the Japanese prime minister’s (PM) offices and met with several senior decision makers to get a firsthand update on what lies ahead. The key takeaway for investors is that the structural bull case for Japan remains intact.
Japan has been among the world’s best performing equity markets thus far this year. WisdomTree has an extensive Japanese toolkit, with 10 distinct Indexes tracked by exchange-traded funds (ETFs).