More than two decades after Goldman Sachs Group first championed womenomics in Japan, a basket of shares focusing on the trend is languishing, having hit an all-time relative low in the stock market last month.

The gauge of companies most exposed to rising female employment and consumption has slumped just over 24% from its high last September, compared to a near 10% decline in the benchmark Topix index over the same period. A heavy weighting in consumer stocks has dragged the basket lower as Japan is buffeted by fears about the reawakening of inflation in the price-sensitive nation and concerns about a slowdown in growth.

Womenomics as a term was coined by Kathy Matsui, a former strategist at Goldman who explored the economic benefits of boosting female participation in the Japanese labor market. The concept was backed by former Prime Minister Shinzo Abe — whose shocking murder rocked Japan last week — but the country has fallen well short of its goals, ranking 116th in the World Economic Forum’s Gender Gap index for 2022.

The Goldman basket contains 36 Japanese stocks including firms such as Oisix Ra Daichi, Shiseido and Fast Retailing. Among the criteria for inclusion was "exposure to products and/or services experiencing increased demand as a result of rising female employment” and those in which "females tend to consume more than males,” Goldman said in a 2014 note.

While inflation in Japan still looks subdued compared to the United States or Europe, prices are bubbling up at a pace that investors fear will weigh on consumption. The latest household spending data already shows consumers starting to cut back on expenditures.

Oisix Ra Daichi — an online wholesale food products company — has the biggest weight in the index and its shares have slumped 42% this year. Those of cosmetics manufacturer Shiseido are down 13%.

Our view on "consumption stocks in Japan will be a little more cautious,” said Amir Anvarzadeh, a strategist at Asymmetric Advisors. "Especially as companies raise prices for consumers and in an inflationary environment where real wages in Japan are going down and household budgets will come even further under pressure for quite some time to come.”

The pandemic took a huge toll on female labor participation in Japan, where women make up a large percentage of part-time workers, though the data is improving. Japan’s female participation rate rose to 54.4% at the end of May from 52.5% in April 2020, according to data from the Ministry of Internal Affairs and Communications.

Still, at the other end of the payscale, the percentage of board seats held by women in Japan was just 8.2%, the second-lowest in Asia, according to a March 2021 report by Deloitte.

"It is true that compared to countries like Hong Kong, India, Taiwan, and South Korea, Japan is lagging behind other Asian exchanges,” said Kaoru Kobu, Head of ESG, Invesco Asset Management (Japan). "If Japan is not able to catch up with Europe and the U.S. and also appears to be behind other Asian countries, Japan’s positioning will be questioned.”

Prime Minister Fumio Kishida has championed a "new capitalism” that addresses inequality and other social issues. As part of his plan, Japan is requiring companies to disclose the wage gap between men and women, starting this summer.

"It must be a meaningful disclosure as we cannot use the given figures if we can’t compare them to places like France or the U.K. which are mandated by global standards,” said Kobu.