Is now the time to consider Japanese shares?

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A closer look at why investing in the Japanese stock market has become appealing to investors.

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Published on 4 December 2023

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Stock market investing 101 says that diversifying the sectors and regions you invest your money in is a good strategy. However, there’s one region that’s been overlooked for decades when it comes to investing – Japan. But could that be about to change?

The Japanese stock market peaked in 1989, and in the years since the Nikkei and the Topix indices have been unable to break higher ground.

Unsurprisingly, the global investment community have shunned a regional market that’s not managed to regain its peak for nearly 34 years.

Four in five active fund managers are underweight in Japanese shares. Of the 225 actively managed strategies in the eVestment database that list the MSCI EAFE as their preferred investment benchmark, 85% are underweight Japanese stocks by an average of 7.5%.

Japan is a G7 economy and has an important role on the world stage. However, a stock