Japan

If you own a global index fund, whether it tracks the MSCI All Country World Index or a similar benchmark, you probably think of it as diversified. The word “global” is right there in the name. You own stocks from dozens of countries across every sector. Diversification achieved. Except that is not quite what is happening. As of early 2026, US equities account for approximately 65% of the MSCI ACWI. Within that US allocation, a handful of technology companies, sometimes called the Magnificent Seven, account for a disproportionate share. By some estimates, fewer than ten companies represent over 20% of the entire global index. When you buy a “global” fund, you are making a very large bet on a very small number of American technology stocks. ...

If your portfolio looks like most Western retail investors’ portfolios, it is heavily allocated to US equities, probably through an index fund that gives you roughly 65% exposure to American companies. That allocation has served you well for the past decade. The question is whether it will continue to do so, and whether you are missing something by not looking elsewhere. Goldman Sachs, JPMorgan, BlackRock, Janus Henderson, Invesco, and Daiwa Asset Management have all published constructive outlooks on Japanese equities for 2026. These are not speculative calls from boutique firms. These are the largest asset managers and investment banks in the world, and they are allocating real capital. ...

On 8 February 2026, Sanae Takaichi won a landslide victory in Japan’s snap election. Her LDP-Ishin coalition secured 352 seats in the 465-member Lower House, surpassing the two-thirds supermajority threshold. For the first time in years, Japan has a government with both a clear economic agenda and the parliamentary authority to execute it. For US and European investors who may not follow Japanese politics closely, this matters. The policy framework that Takaichi is building, sometimes called “Sanaenomics,” represents the most explicitly growth-oriented programme Japan has pursued since Abenomics a decade ago. But where Abenomics relied primarily on monetary policy, Takaichi’s approach centres on industrial strategy and direct fiscal spending. The difference has implications for which sectors benefit and how foreign investors should think about exposure. ...

On 30 January 2026, President Trump nominated Kevin Warsh to succeed Jerome Powell as chairman of the Federal Reserve. The Senate confirmation process is underway, and Warsh is expected to take the chair when Powell’s term expires in May. Most Western coverage has focused on what this means for US rates and the dollar. Less discussed is what it might mean for Japanese equities, and why investors looking to diversify beyond an increasingly concentrated US market should be paying attention. ...

In the third week of January 2026, Japan’s 40-year government bond yield surged past 4% for the first time since the bond’s inception, eventually reaching 4.24%. The 10-year JGB yield hit 2.38%, its highest level in 27 years. It was the most violent sell-off in Japanese government debt in decades, and it sent shockwaves through bond markets in New York and London. If you are an American or European investor, you might have dismissed this as a local Japanese story. That would be a mistake. What happens in the JGB market affects your Treasury yields, your mortgage rate, and the stability of the global fixed-income market in ways that are not immediately obvious but are profoundly important. ...

Two reflationist academics, Toichiro Asada of Chuo University and Motohiro Sato of Aoyama Gakuin University, have been nominated to the Bank of Japan’s Policy Board. The market’s initial reaction was straightforward: the Takaichi government is signalling that it wants to slow rate hikes. The yen weakened, stocks rose, and long-dated bond yields steepened. A textbook reflationist repricing. But there is another way to read these appointments. And which reading proves correct has meaningful implications for how you position in Japanese equities. ...