Reliance on exports cannot stop outperformance in Japan sector

Sharp falls in Topix Index are offset for UK investors as resurgent yen boosts peer group's returns despite heavy reliance on export industry

Japan has long been a notoriously difficult asset allocation call and last year proved no exception as it ended up the top-performing major market despite its heavy reliance on exports. The impact of the global economic slowdown has been all too apparent, but the sharp falls seen in the Topix Index were offset for UK investors by a resurgent yen in the latter part of 2008. In the fourth quarter, the Topix fell -20.9% in local currency terms but this translated into a 14.8% gain for sterling investors, such was the impact of yen appreciation. In the stock market, the year was character...