By James Saft
(Reuters) – You probably missed last year’s epoch-making rally in Japanese stocks, and if you are still underweight, you might just do it to yourself again.
After rising a massive 57 percent last year, its best year in four decades, Tokyo’s Nikkei 225 index will be supported in 2014 by support from local buyers, by the continued benefits of a cheap yen and, most of all, by massive quantitative easing.
None of this is to say that Abenomics, the program of reflation and reform pursued by Prime Minster Shinzo Abe and the Bank of Japan, will ultimately be successful. There is plenty to worry about there – from the fashion in which households appear to be carrying the worst of the burden to the deeply difficult medium-term demographic issues.
That, however, is not our concern right now. If you were underweight Japan, and most people likely were, you signed on for a painful source of underperformance in 2013.
There are good reasons to believe that, all else being equal (which it so rarely is), 2014 could be another good year for Japanese stocks.