Japan is home to a vibrant yet under-researched stockmarket, where the emergence of a dynamic new generation of companies is creating compelling investment opportunities.
Of the 2,000 stocks in the Topix index, well over 50% are covered by no more than one sell-side analyst, which can lead to pricing inefficiencies. This makes Japan an attractive market for active, bottom-up investors on the ground in Tokyo.
Renova: expanding renewables
Japan is at a very early stage in its transition to greener energy sources. Around one third of Japan’s energy is currently sourced from coal, and it remains heavily reliant on natural gas.
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
However, the government’s commitment to reducing Japan’s emissions to net zero and realising carbon neutrality by 2050 presents an interesting opportunity. The move to renewables should help reduce dependence on imported fossil fuels. We expect the contribution of wind, solar, biomass and geothermal power to rise significantly.
We believe Renova (Tokyo: 9519), the only Japanese utility focused solely on renewable-energy sources, is particularly well-positioned to lead the expansion of Japan’s renewable-energy industry.
The group operates solar, biomass, and onshore and offshore wind power plants in Japan and has an established track record in both the development and operation of renewable-energy plants.
Bengo4.com: updating the world of work
Many Japanese businesses have been slow to digitalise. IT systems tend to be old and paper-based work is still commonplace across many offices. For example, the culture of hanko – the practice of physically providing a personal stamp rather than a signature – is still widespread, presenting a hurdle to remote working.
However, the pandemic has prompted many Japanese companies to reevaluate their business customs and models to help improve productivity.
Against this backdrop, we believe the Japanese digital-contract market has significant growth potential. According to current forecasts, the total market could reach ¥400bn (£2.6bn) over the longer term, with substantial growth on the cards over the next five to ten years.
Bengo4.com (Tokyo: 6027) is a pioneer and market leader in this field, providing cloud-based digital certification services through CloudSign – the equivalent of DocuSign – as part of its product range. At present Bengo4.com boasts an 80% market share of registered companies.
BASE : Japan’s Etsy
Japan has also been slow to transition to online shopping, with the e-commerce market still only comprising 8% of sales. Nevertheless, the pandemic has driven many retail businesses online, and we have seen an increase in demand as consumers embrace online shopping on a more permanent basis.
BASE (Tokyo: 4477), similar to Etsy in the UK and US, provides an e-commerce platform for smaller companies and individuals. It is a quality company well-positioned to meet the rising demand for online retail platforms.
It helps users set up online stores quickly and easily without incurring fees, and has continued to perform well despite volatile market conditions.
-
Is mental load driving the widening gender pensions gap?The pension gap may be getting bigger, but it has little to do with the lack of financial literacy and more to do with the mental load women carry
-
MoneyWeek news quiz: How much are the Beckhams worth?Quiz The Beckhams, inflation, unemployment, and house prices all made the news this week. How closely were you following the headlines? Test yourself in MoneyWeek’s news quiz.
-
Profit from pest control with Rentokil InitialRentokil Initial is set for global expansion and offers strong sales growth
-
Three funds to buy for capital growth and global incomeOpinion Three investment trusts with potential for capital growth, selected by Adam Norris, co-portfolio manager of the CT Global Managed Portfolio Trust
-
Fine-art market sees buyers returnWealthy bidders returned to the fine-art market last summer, amid rising demand from younger buyers. What does this mean for 2026?
-
PayPoint: a promising stock for income-seekersPayPoint, a household name across Britain, is moving away from its traditional roots toward a digital future. Investors after a steady income should buy in
-
Investing in forestry: a tax-efficient way to grow your wealthRecord sums are pouring into forestry funds. It makes sense to join the rush, says David Prosser
-
The MoneyWeek investment trust portfolio – early 2026 updateThe MoneyWeek investment trust portfolio had a solid year in 2025. Scottish Mortgage and Law Debenture were the star performers, with very different strategies
-
Pundits had a bad 2025 – here's what it means for investorsThe pundits came in for many shocks in 2025, says Max King. Here is what they should learn from them
-
The MoneyWeek ETF portfolio – early 2026 updateThe MoneyWeek ETF portfolio had a solid year in 2025 and looks well placed for what the next 12 months may bring
