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Global allocators are looking at Japan again

Heather Ng
Once sidelined for low yields and an overvalued currency, Japan is winning back institutional capital across equities, debt and AI.
Global allocators are looking at Japan again
Key Points
  • Japan has moved into mainstream portfolios, with global funds shifting capital into Japanese equities, debt and AI-related sectors.
  • While the Bank of Japan (BOJ) is raising rates, the yen remains weak near USD/JPY 160 due to heavy fiscal stimulus, rate differentials and energy import costs.
  • High debt and political pressure for accommodative policies raise concerns that markets may be underestimating the tightening required to stabilise the currency.

Japan is no longer the market investors once dismissed for negligible yields and an overvalued currency. Both domestic and global allocators are shifting capital into Japanese equities, debt and AI-related sectors, rethinking the country's role in their portfolios.

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