Japanese stock indices are currently trading at their highest historical levels. But, should we still invest in the land of the Rising Sun?
The Nikkei 225 index, the main index of the Tokyo Stock Exchange, has just crossed the threshold of 39,000 points, a level not seen since December 1989, shortly before the bursting of the Japanese financial bubble. It must be said that the country’s economic growth is moving forward after several decades of recession.
An economy that is starting again
A sign of greater dynamism in the economy, inflation has made a comeback, putting an end to the plummeting prices observed in recent years. And even if the Japanese currency continues to evolve at historically low levels, particularly compared to the main international currencies, it helps to encourage the activity of exporting companies, which see the value of their products becoming more competitive abroad.
Of all major markets, Japan has the highest expected growth in forecast earnings per share
Given this new economic environment, the profits of most Japanese multinationals are recovering. Moreover, according to Arnout van Rijn, manager at the management company Robeco, of all the major markets, it is Japan which displays the highest expected growth in forecast earnings per share.
The authorities are at work
Furthermore, during the recent period, Japanese companies listed on the stock exchange have made significant efforts to pamper their shareholders, through more generous dividend distributions, but also by implementing vast share buyback programs. actions.
In addition, for Guy Wagner, head of investments at the management company BLI – Banque de Luxembourg Investments, there are many quality companies on the Japanese market. Added to this are the recent reforms of the Tokyo Stock Exchange, aimed at encouraging listed companies to improve their profitability in the years to come. In addition, the government has put in place tax incentives aimed at encouraging investment in the stock market for Japanese households.
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How to invest in Japan
Given this more buoyant context, the professionals we interviewed are still confident about the potential of the Japanese market despite its recent increase. The question remains how to position yourself in this market. The simplest is undoubtedly to invest through a fund or ETF specialized in this market.
Ideally, it is also preferable to choose a product hedged against the risk of depreciation of the yen against the euro. Indeed, the current weakness of the Japanese currency is not neutral for savers. As an illustration, with the fall of the yen last year, the performance of the Nikkei 225 index, calculated in euros, would have been half as much for a French investor.
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