What Next for Japan?

Shinzo Abe's eight-year reign as Japanese prime minister has come to an abrupt end. What does it mean for investors?

James Gard 2 September, 2020 | 9:10AM
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Shinzo Abe Japan

The early retirement of Shinzo Abe, Japan’s longest serving Prime Minister, brings to a close a fruitful period of investors in the country after many years of disappointment. Whether the ambitious economic stimulus program known as “Abenomics” achieved its aims is still up for debate, but the country's Nikkei index has more than doubled since Abe took over at the end of 2012 (for comparison, the FTSE 100 is at the same level as it was eight years ago). The country has come out of the Covid-19 crisis relatively unscathed, but faces ongoing issues with deflation, sluggish economic growth and an ageing population. 

Just one Japan fund has a Morningstar Analyst Rating of Gold, an index tracker, the £1.3 billion HSBC Japan Index fund. Analyst Kenneth Lamont says it “is one of the very best trackers in a peer group where passive funds have performed well”. The index fund has posted gains of 8% over 10 years, but is down 2.66% year to date.

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James Gard  is content editor for Morningstar.co.uk