Scepticism to be banished by durable recovery

japan

With even the perennially sickly banking sector showing signs of life and a growth rate at an unprecedented 7%, the Japanese equity market looks to be in better shape than it has for years

Investor scepticism has tended to dominate sentiment towards Japanese equities during equity market upswings since the early 1990s. This has mainly been on account of Japan delivering fairly shallow economic recoveries that have been highly dependent on external demand and which have delivered muted earnings growth trends. This time however, economic indicators suggest the recovery may be more durable driven by the structural change in the Asian economic dynamic and years of micro restructuring within Japan, ensuring more sustainable earnings growth at the company level. Moreover, while r...