Inflation hopes send investors back to Japan

Investors are again warming to Japanese equities due to cheap valuations, a shake-up in the domestic investment market, and rising inflation.

Japanese equities have struggled this year, with the Nikkei 225 dropping more than 7% between January and February following 2013’s steep rise, while a higher sales tax introduced in April also triggered investor concern. But multi-managers and wealth managers are now taking advantage of low valuations to add to their positions. In particular, they are reacting to inflation, which rose at the fastest pace for 23 years in April. As well as supporting the government’s ‘Abenomics’ policies, investors hope wage inflation will boost consumer spending and stimulate domestic growth. Premi...