Overall, the Japanese economy is still relatively fragile, fundamentals are mixed, and there is limited positive news on the market. Unless there is a significant shift in policy, we expect this to remain the norm in the short term. The biggest support could come from the government, as the government is starting its slow but gradual shift towards living with COVID. Although tourists are still excluded from the reopening at the moment, allowing foreigners through the borders is a good sign that tourism will eventually recover, which would support the battered service sectors in the country. 
Inflation also continues to be the bright spot, the much lower figure than the global average, which is even lower than that of the Bank of Japan’s long term target, allows the current loose monetary policy to be maintained. This is a gives the Japan market an advantage over other major equity markets as valuations are expected to stay at the current elevated levels, but this advantage is somewhat nullified by the weaker base line. Unless there is any material change to the economy itself, we shall remain neutral on the Japan market for the year.