These improvements are feeding through to the bottom line, which is creating some very attractive valuations, especially when compared to some of their US-based global rivals. So even if the prime minister’s efforts don’t come to fruition, there are still some excellent investment opportunities.
Yet now is not the time to give up on Mr Abe. Japan’s stockmarket traditionally has an inverse relationship to the yen, which has remained obstinately strong against the dollar. But as we edge towards the next US interest rate rise, the yen may well finally give up some ground – potentially good news for Japan’s exporters.
There may even be signs of inflation now that oil and commodity prices seem to have stabilised following precipitous falls over the last two years. To an extent, Mr Abe’s efforts were hamstrung by the oil price fall and now that these declines are starting to fall out of annualised inflation data, prices might actually start to rise.
All of this means that Japan still presents abundant opportunities for active investors. The challenges facing Mr Abe and Mr Kuroda are formidable – but even as they fumble in their quivers for fresh ammunition, there will always be Japanese investments that are absolutely on the mark.
Mike Turner is head of multi-asset at Aberdeen Asset Management
