Headwinds affect Japan's position as a contrarian equity investment

Many market commentators started the year tipping Japan as a contrarian, laggard equity investment for 2010.

However, despite initial enthusiasm, the market has struggled to make significant ground to date as yen strength, European sovereign debt fears and an ongoing spat between the DPJ government and Bank of Japan have proved headwinds. The debate between the Government and Bank of Japan on how best to eliminate deflation has been a key driver of market direction and foreign investor activity in recent months. Hopes were raised in December following an emergency BoJ meeting suggesting a more aggressive stance from the central bank on deflation. However, a lack of further concrete action at...