A picture of corporate Japan

ON JAPAN

Despite the gloomy domestic macroeconomic environment, Japanese corporate earnings have picked up strongly since 2003 after the Japanese financial crisis.

It was interrupted by unfortunate events, including the global financial crisis in 2008 and the earthquake and tsunami in 2011. However, the earnings trend is expected to rebound in 2012 thanks to recovery from the supply chain disruption and reconstruction activities from last year’s disaster. Nonetheless, the Japanese equity market has not reacted to the recovery at all so far, widening the divergence between the improvement in corporate earnings and equity market performance. Investors may be worried that ongoing global economic issues could hamper Japanese corporate earnings, like...