ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Alternatives Channel
      • Artificial Intelligence
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Education
      • ETF Investing
      • ETF Strategist
      • Faith-Based Investing
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Invest Beyond Cash
      • Leveraged & Inverse
      • Modern Alpha
      • Portfolio Strategies
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Gold/Silver/Critical Materials
        • Crypytocurrency
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
    • Market Outlook
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Database Categories
    • Indexes
    • Scenario Analysis
    • Watchlists
    • Head-To-Head ETF Comparison Tool
    • Mutual Fund To ETF Converter
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • Gaining Perspective Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF Strategist Channel
  2. Does Japan Have More Growth Potential Than Other ROW Markets?
ETF Strategist Channel
Share

Does Japan Have More Growth Potential Than Other ROW Markets?

Astoria Portfolio Advisors   Jul 05, 2023
2023-07-05

Astoria’s current macroeconomic framework points towards a constructive view on international equities as non-US markets have become attractive in terms of both valuations and positioning within the current business cycle and inflation cycle. As an outsourced CIO to advisors, we inherit a lot of portfolios with few international equities. In short, non-US markets are further behind the inflation and interest rate cycle. Many European and Asian markets are up >10% YTD while trading at around half the P/E ratios of the United States.

Though we are optimistic about many rest-of-world (ROW) markets, we would contest that Japan has the most attractive upside.

Factors in the bullish case for Japan include attractive valuations, the country’s commitment to injecting liquidity via their yield curve control, and the weakness of the yen. The country’s national currency has dropped to an all-time low as the Bank of Japan, even under new management, continues to support the economy (Fig. 1). Per OMFIF, the country’s liquidity provision entered its 25th year in 2023 as the government aims to use ultra-low yields to control their own debt.

Does Japan Have More Growth Potential Than Other ROW Markets?

There is plenty of reason to believe the country’s assets could remain inflated in the medium-to-long term. Further deterioration of the yen is not just plausible – it seems inevitable. Japan’s debt-to-GDP ratio is a staggering 259%; the next highest country – Sudan – sits at 200%, while the closest G7 member is Italy at 150%. To avoid a default, Japan will need to maintain and potentially heighten their current liquidity injection measures, keeping the yen at historically weak levels.

Our optimism surrounding Japan is further supplemented by the country’s shifting demographic and corporate structure. For decades, nominal growth in Japan was virtually zero percent and investors hardly gave Japanese investments a second glance due to the nation’s aging population and rigid office culture. Conversely, in 2023, the country is set to see positive nominal growth for the first time in thirty years.

The national government’s adoption of “Abenomics” – fiscal reforms enacted by former Prime Minister Shinzo Abe – appears to have Japan’s economy on track for its strongest calendar year growth-wise since 1996. These policies, aided by the massive spending power held by the Japanese public due to excess savings, have Japan on track to outperform its 2023 potential GDP by more than 1%, according to JP Morgan Research (Fig. 2). In stark contrast, the American economy will likely not even reach its own potential GDP figure this year.


Content continues below advertisement

Does Japan Have More Growth Potential Than Other ROW Markets?

The recent optimism surrounding Japan has resulted in a discernible increase in interest in the nation’s markets. After Shinzo Abe’s 2012 election victory resulted in a huge influx of funds, but that reserve has steadily dwindled since the mid-2010s. For the first time in nearly a decade, according to BlackRock, cumulative foreign flows into Japanese equities are on a continuous uptick (Fig. 3). Notably, Berkshire Hathaway has been pouring billions into Japanese markets; this has drawn attention from investors who may have previously questioned the bull thesis for Japan.

Does Japan Have More Growth Potential Than Other ROW Markets?

Best,
John Davi

Follow us on Twitter @AstoriaAdvisors

For more news, information, and analysis, visit the ETF Strategist Channel.

Astoria Portfolio Advisors Disclosure: At the time of this writing, Astoria held positions in SPY on behalf of its clients. Past performance is not indicative of future performance. Any third-party websites provided on www.astoriaadvisors.com are strictly for informational purposes and for convenience. These third-party websites are publicly available and do not belong to Astoria Portfolio Advisors LLC. We do not administer the content or control it. We cannot be held liable for the accuracy, time-sensitive nature, or viability of any information shown on these sites. The material in these links is not intended to be relied upon as a forecast or investment advice by Astoria Portfolio Advisors LLC and does not constitute a recommendation, offer, or solicitation for any security or investment strategy. The appearance of such third-party material on our website does not imply our endorsement of the third-party website. We are not responsible for your use of the linked site or its content. Once you leave Astoria Portfolio Advisors LLC’s website, you will be subject to the terms of use and privacy policies of the third-party website. Refer here for more details.

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2025 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X