“However, Japan must realise that it will be more difficult to play the currency depreciation game given the change in China’s policy this year. The focus therefore will be on the domestic economy and the critical wage negotiations in the spring. Meanwhile, Prime Minister Abe must be having increasing doubts about the next increase in the consumption tax scheduled for April 2017.”
So, as well as the dearth of other investment options at present, the other strong argument in favour of keeping faith with Japanese stocks is that there is a chance we have hit a bump in the road created by China, rather than run into a dead end caused by embedded domestic issues.
Much also seems to rest on whether the Spring wage negotiations will see companies loosen the purse strings and give the thrifty Japanese consumer a little more money to spend.
It will take some nerve for those with big overweights to Japan to ride things out until then.