After a very strong 2013 for Japanese equities, when both the TSE Topix and Nikkei 225 indices outperformed the MSCI AC World index, 2014 has so far proven to be much more difficult from both an absolute and relative return perspective. Both Japanese equities indices have so far underperformed on a global basis this year.
The initial euphoria that surrounded the appointment of Prime Minister Abe, and the subsequent announcement of a number of measures to stimulate the Japanese economy, was a key reason behind the strong stock market performance in 2013. Finally it seemed Japan was taking the necessary action to combat years of deflation, with even the Bank of Japan (BoJ) firmly on board. These monetary and fiscal policies also led to a significant devaluation of the Japanese yen relative to the other major global currencies, including sterling. This means returns were diluted for sterling-based investo...
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