Japan’s Re-Awakening: Strong Fundamentals, Light Positioning

RBC BlueBay argues Japan may offer one of the most compelling developed-market opportunities in years, as investors remain structurally underexposed despite improving macro and corporate conditions. 

• Japan has exited decades of deflation and is sustaining inflation near the BoJ’s 2% target, supporting nominal earnings growth.
• Corporate reforms, buybacks, dividend growth, and political stability under Prime Minister Takaichi are cited as key tailwinds.
• Over 50% of household assets remain in cash, creating potential domestic equity inflows if savings behavior shifts.
• More than 55% of TOPIX 500 firms have fewer than 10 analysts, suggesting continued scope for active stock-pickers.

Could Japan become the rare major market that is improving before investors fully notice? The note argues positioning still lags fundamentals.