The Japanese stock market has underperformed and languished against the US since the infamous burst of Japan’s property bubble in early 1990 that led to two decades of sticky deflation. Even though, the implementation of “Abenomics” in December 2012; a potent mix of expansionary fiscal and monetary policies had led to an accumulated gain of 150% seen in the Nikkei 225 till the end of 2022, it is still 36% below its all-time high level of 38,957 printed in December 1989 before the bursting of the property bubble from its current level of 28,590 at this time of the writing.
Why this time may be different?
Let’s take a trip down memory lane. The underperformance of Japanese equities against the rest of the world since 1990 has been attributed to two main factors; localized demographics where Japan’s birth rate declined faster than the increase in her aging population which led to lower productivity.
Fidelity Japan Trust PLC (LON:FJV) aims to be the key investment of choice for those seeking Japanese companies exposure. The Trust has a ‘growth at reasonable price’ (GARP) investment style and approach – which involves identifying companies whose growth prospects are being under-appreciated or are not fully recognised by other investors.