The weakness of the Japanese Yen in recent weeks following the Trump-led strength in the US dollar has once again thrown the spotlight on the performance potential of Japanese equities. Indeed, it may come as a surprise to some investors that, despite the relative weakness of the Japanese economy in the past decade or so, equity returns have held up reasonably well. What's more, history shows that in those periods when Japanese equities tend to outperform it is usually when the Yen is weak. Should the Yen continue to weaken in 2017, therefore, it suggests Japanese equities may do relatively well - particularly on a currency-hedged basis.
