- Japan has suffered from increasing Covid-19 infections, a corporate scandal and Olympics uncertainty
- Relatively low valuations and well capitalised companies make parts of Japan’s stock market still look attractive
It’s been a disappointing year for Japan. Questions linger over the Olympics which is due to start on 23 July, after Tokyo was placed under a state of emergency in April amid rising Covid-19 cases. A poll in May found that 60 per cent of the Japanese public did not want the games to go ahead, foreign spectators have been ruled out and domestic spectators capped at 10,000 per venue. The number of Covid-19 infections in Japan has been rising at the same time as the situation in the US and Europe has been improving, and Japan is significantly behind other developed markets with its vaccination programme.
These factors have led to the Japanese stock market lagging others during the recent rally in cyclical stocks. For example, over the past three months MSCI UK index is up 7.5 per cent while MSCI Japan is only up 1 per cent.