Consumption and capital expenditure are key drivers of the market recovery

JAPAN ANALYSIS

The Japanese market has yet again proved to be very contrarian.

At the beginning of the year, one particular broadsheet was somewhat depressed about the Nikkei 225’s outlook, even after a 20-year bear market. As we enter the second quarter, the TSE First Section Index is up by 9% in dollar terms, which compares favourably with both MSCI Asia and MSCI Emerging Markets which are up by 4.3% and 5.2% respectively. This has not come as a surprise to us. Five recent trips to Japan have confirmed aggressive and fixed cost cutting in the form of labour costs and falling depreciation charges combined with the fall of selling, general and administrative exp...