We aren't convinced by the narrative that the recent surge in Japan's stock market reflects a genuine turnaround in the fortunes for Japan's economy. While firms still seem to be able to escape weak demand at home by expanding overseas, they face mounting headwinds in China, where the sales of subsidiaries owned by Japanese manufacturers fell the most on record in Q1. And with the yen set to strengthen again, the recent tailwind to corporate earnings from a weaker currency won't be sustained.
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