Amundi: Japanese equities reach their highest level in 34 years

Amundi: Japanese equities reach their highest level in 34 years

February 14, 2024

Equity Japan
Japan Sakura Lente Bloei (ChiemSeherin, Pixabay)

Japanese equities continue their strong performance in 2024, reaching their highest levels in 34 years. The recent trend has also benefitted technology shares supported by a solid economic outlook.

In Amundi’s latest Weekly Market Directions, Monica Defend, Head of the Amundi Investment Institute, writes: 'For international investors the Japanese equity market remains an attractive tactical opportunity supported by the ongoing recovery in profit and corporate reforms.'

Defend points to three main factors that is driving this positive trend in Japanese equities:

  • Firstly, the Tokyo Stock Exchange has encouraged companies to improve their capital efficiency.
  • Secondly, the profit recovery which equities are undergoing and the fall in the Yen vs the US dollar have supported this trend so far.
  • The third element is the end of deflation. Wage negotiations in the spring are expected to lead to wage rises, further confirming this trend.

All these factors are attracting foreign investors flows into the Japanese markets. Looking forward, Defend comments that a key variable to watch will be the Yen as a strengthening could negatively impact on exporters and the Bank of Japan policy.

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