Look beyond Japan’s Olympic omnishambles
Japan's insistence on going through with the Olympics in the midst of the global pandemic has been described as a "suicide mission". But the long-term case for investors in Japan is encouraging.

Welcoming “90,000 visitors from all over the world during a pandemic” to a “densely populated city where vaccinations trail Bangladesh… gee, what could go wrong?” asks William Pesek in Nikkei Asia. Japan insists that it can safely hold the Olympic games in July, but opinion polls show that more than 80% of the country’s citizens are opposed. Pressure is growing on the prime minister, Yoshihide Suga, who has backed the games. The head of e-commerce giant Rakuten, Hiroshi Mikitani, has dubbed the Olympics a “suicide mission”.
Japan has so far done a relatively good job at containing the virus, but was forced to declare a state of emergency last month in response to a new wave of cases. Uncertainty about the Olympics has weighed on markets. The Topix index has gained 7% so far this year, making it a global laggard.
Overseas investors dumped a net ¥1trn (£6.5bn) in local stocks during the second week of May, says Hideyuki Sano on Reuters, the biggest outflow since March 2020. The economic costs of cancelling the Olympics would be limited as Japan has already barred foreign tourists from attending. The games look set to deliver a stimulus equivalent to just 0.3% of GDP. That is a poor return given the risk of importing “multiple Covid-19 variants”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Still, the long-term case for Japan is encouraging, says Simon Constable in The Wall Street Journal. The market was once shunned for its poor corporate governance, but reforms have forced Japan’s boardrooms to take shareholder value seriously. Schroders reports that the market’s average return on equity, a key gauge of profitability, has risen from 5% in 2013 to 6%-7% in 2019. That should spark more interest from global investors once the Olympics omnishambles has been sorted out.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
Albert Einstein's first violin sells for £860,000 at auction
Albert Einstein left his first violin behind as he escaped Nazi Germany. Last week, it became the most expensive instrument not owned by a concert violinist
-
Who is Rob Granieri, the mysterious billionaire leader of Jane Street?
Profits at Jane Street have exploded, throwing billionaire Rob Granieri into the limelight. But it’s not just the firm’s success that is prompting scrutiny
-
Emerging markets boast top-quality growth stocks at bargain prices
Opinion Lim Wen Loong, investment director at Ashoka WhiteOak Capital, selects three growth stocks where he’d put his money
-
Beware the bubble in bitcoin treasury companies
Bitcoin treasury companies are no longer coining it. Short this one, says Matthew Partridge
-
Klarna leads a financial revolution – should investors buy?
Klarna has ambitions to rewire the global payments system and has huge growth potential
-
New faces don’t solve old problems – why strategy also matters when it comes to investment trusts
Opinion Changing managers often fails to boost a trust’s performance, says Max King
-
How to profit from silver’s record rise
Silver often lets investors down, but there may now be room for further gains, says Dominic Frisby
-
Are venture-capital trusts worth investing in?
Venture-capital trusts are a tax-efficient way to invest in early-stage companies. But are they worth the risk?