Economy and politics
Japan is the third largest economy in the world. The Japanese economy has grown to a considerable size in the last century. With a lot of capitalism, hard work and innovation, Japan managed to catch up with the US and go from an emerging market to a world power and has a lot of catching up to do. However, Japan is not so well known or popular among German investors.
Why is this the case and why does Japan have some catching up to do? The Japan Crash in 1986 and the permanent state of crisis since 1990 are the cause. In 1986, a period began that would weigh heavily on Japan ever since.
Japanese as well as foreign investors saw a lot of potential in the Japanese market and started buying all the assets there. A huge asset bubble was created. Ordinary companies were trading at P/E ratios of 100 and higher. The Nikkei 225 rose to a price of almost 39,000 points. This bubble was able to last for five years.
1992 kam es zum großen Crash in Japan und eine Menge Anlegergelder sind verloren gegangen. Nachdem erst starken Wirtschaftswachstum ist Japan in eine sehr lange Stagnation verfallen. Ein langanhaltendes geringes Produktionswachstum begann. Die Gesellschaft wurde immer älter, die Gehälter in Japan sind kaum gestiegen.
Today, Japan is a different country. Shinzo Abe of the LDP becomes the prime minister of Japan in 2012. He introduces the so-called "Abenomics" as an economic program. Under his government, Japan manages to grow again. Consumption increases. Important jobs can be filled again. A new era begins for Japan.
Prime Minister Shinzo Abe has consequently embarked on an economically new path to dare more capitalism again. Bringing the old population back into the labor market and increasing human capital. Japan is also developing technologically. In the past, Japan was already known for industry and technology. Today, Japan wants to return to old glory. Among other things, it is investing in robots, renewable energy and hydrogen.
Japan is a liberal market economy that is still partly state-controlled. Compared to Germany, taxes are lower and laws for employees are less strict. Abe retired in September 2020. Although he was in office for only eight years, that was the longest time a prime minister in Japan has ever led the people.
His successor is Yoshihide Suga. He has announced that he does not want to break with Abe's policy. The fear of politics runs deep that the tender growth of Japanese politics could be brought to an end again. The Japanese people have suffered from poor economic conditions for too long. However, the lack of labor has led to Japan becoming a stronghold for industrial robots, and Japan's automakers are focusing on hydrogen mobility as a solution to climate change, very innovative.
The largest companies
Itochu, SoftBank, Nintendo and Sony are the big well-known companies in Japan. Itochu is an independent company and today operates as one of the largest trading companies in the world. It is limited to the following segments: Food, Engineering, Energy & Chemicals as well as activities around metals, raw materials, textiles and real estate.
Softbank is the largest startup investor in the world. They invest in startup business models that have been established in the market for many years, but at the same time still have enormous upside potential. SoftBank invests as a classic "venture capitalist" relatively late within the startup phase.
Nintendo is perhaps the best-known gaming company in the world. And one of the very few that have really lasted for many decades. Much like Disney, Nintendo has managed to create characters and brands that have shaped our entire human culture: Super Mario, Donkey Kong, Legend of Zelda, Animal Crossing, Super Smash Bros, and of course Pokemon. The medium almost doesn't matter: playing cards, Gameboy, Wii, Nintendo DS, Nintendo Switch or an app (Pokémon GO).
Sony is the largest electronics company in Japan and a real conglomerate in the electronics market. Sony manufactures electronic products such as cameras, televisions and smartphones, has a large financing business, a music publishing company and is one of the largest gaming companies in the world. Sony's Playstation is known to everyone in the world.
The largest and most important trading centers
Die Tokyo Stock Exchange. It is the largest stock exchange in Japan and the third largest in the world in terms of the market capitalization of the shares listed there (after the New York Stock Exchange and NASDAQ).
The Osaka Exchange is the second largest securities exchange in Japan. Derivatives such as futures and options are primarily traded here. The second largest stock exchange for shares is the Nagoya Stock Exchange. However, trading in Japan is mainly concentrated on the Tokyo Stock Exchange.
Price development of the indices
The Nikkei 225 is the best known index from Japan. It is mostly treated as the leading index in Japan. Its calculation is based on the fact that the individual shares in the index are weighted by their price, rather than market capitalization. This means that the higher the price, the more this contributes to the index performance.
This weighting method is quite unusual nowadays, which is why the Nikkei index is criticized for not properly representing the Japanese economy. Even after the Japanese crisis, Japan's leading index, the Nikkei, was hardly able to generate any returns in the long term. Currently, the index stands at over 27,000 points.
The Topix index is issued by the Tokyo Stock Exchange and is considered a major competitor to the Nikkei. It measures the performance of over 2,000 companies and is weighted according to market capitalization. As a result, it represents the Japanese economy much better.
Trading hours in Japan
Stock market trading in Japan is relatively short. Trading takes place between 9:00 a.m. and 3:00 p.m. with a one-hour lunch break. Consequently, trading takes place between 01:00 and 07:00 CET.
Top stocks in Japan