Despite the volatility and downdraft experienced over the last nine months, we believe Japan represents one of the best opportunities among global equity markets over the coming three to five years.
Taken at face value, one can understand the criticism of Japan’s experiment with a negative interest rate policy (NIRP). If judged by currency impact, Japan’s NIRP has failed so far—the yen is up, not down. But let us make a counterargument to support Bank of Japan (BOJ) governor Haruhiko Kuroda’s claim that all is on track.
Throughout January, global equity markets experienced significant volatility, often accompanied by concerns of global growth prospects, especially surrounding anything related to China and emerging markets. We find that understanding where the revenue of holdings comes from can be a highly complementary approach when evaluating potential investments. This is particularly prudent in Japan.
WisdomTree believes Japan could represent one of the best equity markets over the coming years. The Bank of Japan introduced new stimulus tools in January 2016, and we expect it to continue to add to this easing over the coming months and years.