Why there is growing optimism

ON JAPAN

Investors are well aware of the problems Japan faced during 2011: the tragic tsunami, nuclear disaster, electricity shortages and the Thai flood.

These caused severe economic disruptions and supply side shortages. The combination of these issues led to a fall of 18.9% in the Topix during the year, resulting in the lowest level since 1984. The start of 2012 was promising; worldwide markets were lifted by improving US indicators and what appeared to be positive steps regarding the European debt crisis, however the strong yen continued to depress the Japanese economy. The Bank of Japan added ¥10trn to its asset purchase programme on 14 February, as well as setting a 1% inflation target. The change in attitude was a positive one, a...