Three bull and bear points for investing in Japan

Our current view on Japan comprises three main bearish elements, and three bullish ones. We will turn first to the bearish considerations.

The Bank of Japan's (BoJ) monetary policy is relatively tight; it has been on the sidelines to a greater extent than other central banks during the pandemic. The BoJ feels that significant easing would be counterproductive, in part because its purchases of Japanese government bonds a few years ago impaired the market. Second, some of the country's dominant sectors are out of favour, such as autos and finance. Toyota is the biggest stock in the market and much of Japanese industry is geared to supplying that company. Toyota could especially be at a disadvantage if the industry moves...