What is the right strategy when investing in Japan?

Index 'substantially' below all-time peak

Japan has certainly not made things easy for investors. The Topix index is still trading substantially below its all-time peak, while the economy has produced its fair share of negative news for as long as most people can remember. However, this top-down view can obscure opportunities from investors. Rigorous fundamental analysis of the stock market universe is key, writes Ernst Glanzmann, head of Japan equities at GAM.

Our experience and track record shows that this approach - investing in high-quality companies, yielding superior performance across business cycles - also removes the incentive for market timing, which is tricky at the best of times.  It looks of course tempting: every time the yen weakens substantially, Japanese indices rally driven by the major exporters.  The Bank of Japan's various phases of quantitative easing over the past few years come to mind. They have led to a weaker currency, in turn boosting share prices. To us, this is a common error in perception because the yen's depr...