The Opportunity in Japanese Stocks

Japanese stocks were standout performers in 2023 after years of stagnation and deflation left Japan an unloved investment destination. Can the positive momentum continue in 2024? BlackRock’s Belinda Boa believes it can and sees the makings of a rags-to-riches story with staying power ― and abundant investment potential.

After a series of lost decades left Japan off the popular investing map, the long-beleaguered market is showing signs of resurgence. Belinda Boa, Head of Active Investments for Asia Pacific at BlackRock, joined The Bid podcast to examine the brightening prospects that she sees defining Japan's future on the global investing stage.

Riches to rags … to riches again?

Despite its more recent malaise, Japan was the picture of success in the mid-20th century. Its status as a rich agricultural hub in the 1960s and a center of engineering and innovation in the 1970s helped propel Japan to become the world’s second-largest economy by the 1980s. Economic success begot market success and at its peak in December 1989, Japan represented 45% of the world’s stock market capitalization.1

Few may recall this bygone Japan, as what followed was three decades of economic stagnation and deflation that sent the country’s market cap on a steep decline ― to roughly 6% today.2 Yet this number has been inching higher, particularly as Japan led global stock market gains in 2023 and has continued its positive momentum into 2024. Ms. Boa sees good reason to believe this thrust can continue amid what she terms a massive transformation.

"We are now seeing efforts by policymakers and by corporates which are turning around what has been a very disinteresting environment for Japanese investors."