Japan Stock Market Valuations and Expected Future Returns

Country: Japan (updated daily) check out Global Overview for detailed methodology.

Ratio of total market cap over GDP: Maximum - 361%; Minimum - 56%; current - 159%
Expected future annual return: 0.7%

ETF Used for dividend yield: EWJ (Yield=1.62%)
Market Index used: Nikki225
Current Annual GDP: $4,488 billion US dollars or 509,304 in billions of national currency (GDP in Local Current Prices Annual Growth=0.2%)
Data since year 1984

Japan Historical GDP Growth

Historical GDP of Japan in billions of national currency. The GDP in local current prices has grown at the annual rate of 0.2% over the past 8 years. Please note this growth rate includes the effect of price inflation and it is NOT the real GDP growth rate. Current Annual GDP: $4,488 billion US dollars or 509,304 in billions of national currency.

Historical Stock Market Cap

Historical total market of Japan in billions of national currency. This value is normalized using the data published by WorldBank. Nikki225 is used for the normalization. Use Nikki225 as index, data goes back to 1984.  Annual GDP data from IMF, back to 1980, in billions Yen.

Historical Ratio of Total Market Cap over GDP (%)

The current ratio of total market cap over GDP for Japan is 159%. The historical high was 361%; the historical low was 56%. If we assume that the ratio will reverse to the historical mean of 139% over the next 8 years, the contribution to expected annual return is -1.15%. This is the detailed historical chart of the ratio.

Conclusion

The stock market of Japan is expected to return 0.7% a year for the coming years. This is from the contribution of economic growth in local current prices: 0.2%, Dividend Yield: 1.62% and valuation reverse to the mean -1.15%.

This is the projected return of the stock market in Japan relative to other countries. Click on each bar in the chart to go to other countries:


You can go here to see what international stocks Gurus are buying.