Japanese equities rebounded in July as global market sentiment briefly recovered on the back of optimism over inflation and monetary tightening, alongside decent data from the local economy. Over the month, the Japanese Yen stabilised against the Dollar, the Nikkei 225 gained 5.34% (7.20% in US$ terms), while the TOPIX index was 3.71% higher (5.55% in US$ terms). Early in the month, former Prime Minister Shinzo Abe was assassinated, the unfortunate event though enabled the Liberal Democratic Party to go ahead and win a supermajority in the House, which will help stabilise the political landscape, supporting the Japanese economy outlook. As for the epidemic front, Prime Minister Fumio Kishida said that the government will not re-impose COVID restrictions. Borders are now open to most countries, though the necessity for inbound tourists to be fully guided was a big turnoff for many. Further easing on this front could act as another catalyst for the Japanese economy. Fundamentals too are positive, with decent PMIs and household spending data. However, CPI figures continue to stay above the 2% long term target, partly driven by the depreciation of the Japanese Yen. While the weak currency is somewhat beneficial for exporters, it could put additional pressure onto households’ spending power. At the moment, Japan’s economic outlook is relatively positive, though the weak currency could erode total returns for non-Japanese investors. We remain neutral on the Japanese equity market for the time being, pending further lifting of restrictions, which might offer further upside potential.