“Beyond the currency effect, we see tentative signs of a pickup in inflation as well as rising corporate buybacks and dividend payouts as further positives. All these are translating into higher earnings estimates,” according to BlackRock.
Japanese equities also show more attractive valuations, compared to the pricier U.S. markers. For instance, HEWJ shows a 15.42 price-to-earnings and a 1.2 price-to-book, whereas the S&P 500 index is trading at a 18.9 P/E and a 2.6 P/B.
Furthermore, as an economy that is closely tied to the global market, the continued growth will help lift Japanese equities.
“Japan is in a prime position to benefit from a cyclical upturn in global growth,” BlackRock added.
For more information on the Japanese markets, visit our Japan category.