Japan’s Nikkei 225 index declined to a 27-year low last year, and it’s still 70% off its highs, which haven’t been seen in nearly a generation. That presents an opportunity for exchange traded fund (ETF) investors.
Years after a collapsed real estate bubble, an ailing banking system and wasteful spending, Japan has dusted itself off and the country’s leaders are now ready to move ahead. [How Toyota is Impacting Japan’s ETFs.]
So far this year, the Tokyo stock exchange is one of the world’s best performers, tax cuts are imminent and small- to mid-size business are going to get some help, reports Alexander Green for Investment U.
There may be an economic renaissance in Japan if it’s successful in these areas, Green says:
- Political and economic policy overhaul: Japan new leadership has the country on the brink of a new economy. After a decade of stagnation, the decisions made now could reverberate for years. [20 Years After Japan’s Bubble.]
- Cash flows: Both Japanese investors and consumers have cash on hand and are ready to spend it. If the money filters into the stock market and back into equities, the Tokyo market may see new highs. [Asia’s Economic Resilience.]
- Institutional help: Many of the larger investment institutions are weighted low in Japan. Possibly many individual investors are as well. If Japan’s economy takes off, watch the trend lines so you don’t miss out. [How to Follow Trends.]
For more stories about Japan, visit our Japan category.
- iShares MSCI Japan Index (NYSEArca: EWJ)
- WisdomTree Japan SmallCap Dividend Fund (NYSEArca: DFJ)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.