Looking at equity valuations, Japanese stocks look cheaper than the U.S. For instance, EWJ shows a 16.0 price-to-earnings ratio and a 1.4 price-to-book, whereas the S&P 500 index is trading at a 18.7 P/E and a 2.5 P/B.

“From an equity market perspective, we’re looking at relatively flat returns and still some high volatility in the near term but I should be clear, if we take a 6 or 12 month view, we think you’re going to see some pretty good progress in equity markets. And over that horizon we would see the best returns in Europe and Japan,” Oppenheimer said. “That’s where the valuations are the most supportive and we’ve still got a reasonable improvement in profitability. And it’s in those markets, I think, people should be looking to accumulate into volatility weakness in the near term.”

Furthermore, Bob Janjuah, a Nomura strategist, pointed out that central bank policy could further support Japanese equities as the Bank of Japan could “go again” and produce another round of quantitative easing to mitigate deflationary concerns. Consequently, the Japanese yen could further depreciate against the U.S. dollar.

For ETF investors, currency-hedged Japan ETF options may be a better play to hedge against the negative effects of a depreciating yen while capturing potential growth from loose monetary policies.

iShares MSCI Japan ETF

For more information on the Japanese market, visit our Japan category.

Max Chen contributed to this article.

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