The two sectors in Japan with the potential to add 'differentiated value'

The Japanese equity market will resume its ascent, buoyed by favourable political conditions, strong and evolving corporate reforms and continued monetary easing by the Bank of Japan (BoJ).

However, there are still potential squalls on the horizon and investors would be wise to focus on growth stocks insulated from the external environment, with rising ROEs through higher earnings. As Prime Minister Shinzo Abe enters his third term as LDP President the labour market looks very strong. If foreign exchange rates remain favourable, corporate profits look set to continue to grow. Corporate management reform, one of the three arrows of Abenomics, has seen strong progress. In addition, the BoJ will in all probability maintain its easy monetary policy until after the consump...