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As the Global Economy Recovers, Japan Stands in the Spotlight

Upbeat outlook as Japanese market is highly geared to global recovery
Archibald Ciganer, Portfolio Manager
T. Rowe Price,  June 2021

Key Insights

  • The outlook for Japanese equities appears favorable at the current stage of the business cycle.
  • The cyclical nature of the Japan equity market means it is highly leveraged to a prospective recovery in global demand.
  • Ongoing structural market reform and the acceleration of secular growth trends add to the optimistic outlook for Japan through 2021 and beyond.


While Japanese equities made solid progress during the first half of 2021, the TOPIX gaining 8.52%, year-to date (as of May 28, 2021), performance has ultimately disappointed, with Japan trailing other major equity market returns. This is partly due to Japan’s strong outperformance in 2020, but also reflects idiosyncratic issues, such as the slow roll-out of the coronavirus vaccine and, more recently, the imposition of localized lock downs in certain prefectures, including Tokyo.

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