Japan's Equity Renaissance: A Strategic Approach to Growth and Value

Japan's equity market has been fueled by structural reforms, corporate governance improvements, and strong earnings growth, with the Nikkei 225 surpassing its 1989 peak. However, volatility remains high due to hawkish signals from the BOJ and external economic risks. While inflation is rising, real wage growth is expected to turn positive, potentially boosting consumption. The GARP (Growth at a Reasonable Price) strategy has proven effective, identifying stocks with strong earnings growth and attractive valuations. A back tested GARP portfolio of 10 Nikkei 225 stocks outperformed the broader index, demonstrating its potential in uncertain markets. While Japan’s market outlook remains strong, it is still volatile, presenting opportunities for growth-oriented investors who use disciplined valuation metrics. GARP offers a strategic approach to capture upside while managing risks in Japan’s evolving economic landscape.