Understanding the Japan & Asia Markets
Japanese valuation must be read alongside the Bank of Japan's enormous footprint. The Japan valuation gauge shows where the Nikkei sits relative to its own history, but that history includes the most famous bubble of all time — the 1989 peak whose collapse ushered in decades of stagnation, a permanent reminder of what detached valuations can cost. Today the BOJ's direct equity purchases and vast balance sheet provide structural support that no other major market enjoys, meaning Japanese valuations carry a policy-driven component. The yen is the other master variable: because Japan is an export economy, a weak currency lifts corporate earnings and the index together. For the wider Asian region, Japan often sets the tone, but each market — from Korea to Taiwan — carries its own mix of technology-cycle exposure and China sensitivity.