Invesco Perpetual's Chesson on Japan's new challenges

ON JAPAN

After the euphoria of 2013, investors in Japanese equities have had a more challenging start to 2014.

Recent domestic concerns have been focused on what impact the recently implemented consumption tax hike will have on Japan’s economy. The impact is difficult to predict, but the general expectation among economists and analysts of a sharp contraction in the second quarter, followed by an increase in growth through the second half of the year is likely to be broadly correct. There is uncertainty surrounding the extent of the fall and speed of the recovery, which will likely cause periods of volatility in the coming months, with the market remaining very data dependent in the short term...