Gradually, the Japanese economy is improving. In November, retail sales rose 5.3% year-on-year, while the core inflation index followed by the Bank of Japan fell to 2.7% (from 3.0% in October).
These are indicators of an economy holding up relatively well and where inflation gradually returns to the 2.0% target.
This downward trend in inflation is similar to what we see in most Western economies; on the other hand, it should be noted that Japan did so without resorting to interest rate hikes that suffocated consumers in most of our Western economies.
Faced with this relatively neutral situation, the monetary authorities in Tokyo do not seem too eager to change their tune. This does not do business for the yen, which, still suffering from an interest rate differential that is highly unfavourable to it, needs to take off.
But despite doubts about monetary policy and the yen's weakness, the Japanese stock exchange ends 2023 with an honourable gain of about 14% (in €).
We continue to invest in it across our portfolios.