Three small caps that can grow in Japan

Japan has not been a good place to invest lately. But while large Japanese companies tend to have little scope for growing their earnings, smaller firms can have better prospects. Cris Sholto Heaton finds reasons to be optimistic about Japan, and tips three small-cap companies with decent prospects for growth.

Japan is one of the world's biggest stock markets. But I don't write about it often in MoneyWeek Asia. That's because it's a very different place to most of its neighbours.

They're fast growing and mostly still developing. Sentiment in their markets is very positive. Japan is quite the opposite. Yes, much of the commentary you see about it is misleading. It's not a two-decade slough of despond: it's an advanced country with an excellent standard of living. It's home to some of the world's best-run and most innovative companies. But it's not been a good place to invest of late.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.