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Change in Political Leadership and the Outlook for Japan

Prospects for stocks look bright amid expected policy continuity

Archibald Ciganer, Portfolio Manager
T. Rowe Price,  Insights on Japanese Equities, November 2021

Key Insights

  • Given tentative moves toward economic reopening and supportive political developments, we believe the prospects for Japanese stocks look bright.

  • Our positive outlook is predicated on social and economic normalization following the coronavirus pandemic and expectations of policy continuity under new leadership.

  • The high degree to which Japanese corporate profits are levered to the global economic recovery adds to our optimism about the country’s stock market.


Japan has had a challenging year. After outperforming in 2020, the country has disappointed investors in 2021 due in part to the delayed rollout of its COVID‑19 vaccination program, as well as the public’s negative reaction to the government’s decision to host the Olympics amid concerns about the spread of the coronavirus. With his popularity hovering around all‑time lows, these factors ultimately contributed to the decision by Prime Minister Yoshihide Suga to resign in September.

Taking stock, however, the Olympics are now behind us, Japan’s vaccination drive has overtaken that of many developed market peers, and there have been some positive political developments—against this backdrop, Japan has started to outperform.


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