Japan: Time to give the land of falling stocks another look?

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Nov. 26 2019, Updated 10:56 a.m. ET

So far, 2014 has been the year of the falling stocks in Japan. But according to Russ, Japan still stands out as one of the few potential bargains in the developed world. He explains.

Japanese equities have lagged global stocks; their year-to-date performance is on par with stocks in crisis-plagued Russia.

Market Realist – Since the beginning of the year, Japanese equities (EWJ) have returned only 2%, compared to the close to 7% year-to-date returns of the MSCI World Index (URTH) and the S&P 500 Index (SPY). Note that as of early May, Japanese equities had negative returns for the year and have since increased over 10% to reach the current return level.

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As Japan’s economic growth momentum has slowed, structural reforms have generally been moving at a snail’s pace and the Bank of Japan (or BOJ) hasn’t taken any further easing action, Japanese bulls have been growing impatient. Quick institutional money has been leaving the country in recent months, and the Japanese stock market is no longer the most crowded trade in the world, as it was last year.

It’s hardly surprising, then, that many investors are now wondering whether I’m still bullish on the land of the rising sun. The short answer: Yes. In my opinion, Japan still stands out as one of the best bargains in the developed world. Consider these five factors supporting the case for Japanese stocks for the remainder of the year.

Market Realist – Continue reading to the next part of this series to understand the factors. To learn more about Japan’s (EWJ) current situation, check out Japan’s investment environment dependent upon government deficits.

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