What makes Japanese stocks different from other international investments?

Japanese stocks offer a unique combination of industrial tradition and technological innovation from the world's third-largest economy. They provide exposure to globally respected brands with strong quality reputations, robust manufacturing capabilities, and cutting-edge technology. Japanese companies are known for their long-term planning, reliability, and increasing focus on shareholder returns through corporate governance reforms.

How do currency exchange rates affect Japanese stocks?

Exchange rates between the Japanese yen and your local currency directly impact your returns when investing in Japanese stocks. When the yen weakens against your currency, it can benefit Japan's many export-oriented companies by making their products more competitive globally and potentially boosting their profits. However, this same currency movement might reduce the value of your investment when converted back to your home currency. Currency fluctuations add another layer of both risk and opportunity when investing in international markets like Japan.

What are corporate governance reforms in Japan?

Corporate governance reforms in Japan refer to ongoing initiatives to improve how Japanese companies are managed, with a greater focus on transparency, efficiency, and shareholder returns. Historically, many Japanese firms prioritized stakeholders like employees and business partners over shareholders. Recent reforms encourage companies to add independent directors, improve capital efficiency, reduce cross-shareholdings (where companies own each other's stock), and increase dividends and share buybacks. These changes aim to unlock shareholder value and make Japanese stocks more attractive to international investors.

What is a dividend yield and why does it matter?

Dividend yield is the annual dividend payment divided by a stock's current price, expressed as a percentage. For example, if a stock costs $100 and pays $3 in annual dividends, the yield is 3%. This metric helps you understand how much income you'll receive relative to your investment. Higher yields can provide regular income while you hold the stock, which can be especially valuable from stable Japanese companies. However, extremely high yields might signal problems with the company or its share price, so it's important to look at the overall financial health too.

What's meant by "market cap" when looking at these stocks?

Market capitalization (market cap) is the total value of a company's outstanding shares, calculated by multiplying the current share price by the number of shares. For example, if a company has 1 billion shares priced at $50 each, its market cap is $50 billion. This figure helps you understand a company's size—large-cap companies (like many Japanese multinationals) tend to be more stable but may grow more slowly, while smaller companies might offer more growth potential with higher risk. Market cap gives you perspective on how significant a company is within its industry and the broader market.

15 handpicked stocks

Japanese Stocks

Dive into the unique blend of industrial power and technological innovation that defines Japan's market leaders. These carefully selected companies represent the best of Japan's globally respected brands, offering you exposure to the world's third-largest economy.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17