Japanese stocks have attracted significant investor interest, bolstered by corporate governance reforms initiated in 2014-15, which have resulted in over 90% of listed companies now having independent board representation. The Tokyo Stock Exchange has intensified pressure on companies to meet capital efficiency standards, driving a notable rise in shareholder returns: share buybacks have increased nearly sixfold over the past decade, and dividends have doubled.
The Japanese yen’s depreciation has further enhanced the attractiveness of Japanese exports, aiding in record foreign investment inflows. In 2025, Japan’s equity market is expected to continue its structural shift toward long-term investor appeal, although potential risks, such as a yen recovery and elevated valuations, remain.
According to current data, the iShares MSCI Japan ETF (EWJ) is up 12% in 2026 and has a market capitalization of over $21 million, while the WisdomTree Japan Hedged Equity Fund (DXJ) has surged over 50% in the last year, with $6.6 billion in assets under management. Notable individual stocks include Sony Group, which has risen almost 500% over five years, and Toyota Motors, which, despite being down 10% year-to-date, has a consensus price target suggesting potential for significant upside.
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