Japan Dividend Payouts Improve

Is Japan is ready to turn the corner and enter a period of sustained economic expansion? There have been some signs of corporate improvement

Dan Kemp 26 September, 2017 | 4:18PM

The lost decades in Japan have become one of the defining investment stories of our time. Since the 1989 stock market highs, the country has gone through a sustained period of weak economic growth with intermittent recessions and periods of deflation that has resulted in GDP that is practically unchanged in nominal terms. As a result of the asset price deflation that has accompanied these economic woes, both equities and residential property remain below their 1989 highs.

This has created a fascinating situation, with an extended period of stress and many false starts. In an attempt to end the ongoing trauma, promote growth and counteract the deleveraging in the private sector, the government of Japan has increased leverage significantly to become one of the world’s most indebted countries, with debt to GDP at over 200%.

The question long left unanswered is whether Japan is ready to turn the corner and enter a period of sustained economic expansion. If it does turn around, as many think it is ready to, unloved Japanese equities could be an attractive long-term position offering diversification benefits and the potential for gain as prices return to more normal levels.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA

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