Japan very well placed to benefit from emerging market demand

As a country, Japan's rocky ride through the global downturn has led some commentators to question the country's future, while the long-term returns from the market have been variously disappointing or unimpressive for nearly two decades.

Should we follow the crowd and forget about investing in Japan? We do not think so. The first thing to remember when people are (rightly) excited by emerging markets growth, is Japan is right next door to many of these fast-growing economies, and is well placed to benefit from their increased demand. Chinese imports of Japanese goods were up 40% year on year in December and half of Japanese exports now go to Asia. Second, the Japanese market remains very large. There are over 3,000 listed companies in Japan large enough to invest in and Japan’s markets are in value terms roughly equiv...