Inflationary pressure that’s pounding economies worldwide is hitting long deflation-ridden Japan too, and that’s boosting shares of companies that can raise wages to retain talent.
That can be seen in the strong performance of exchange-traded funds that invest in Japanese firms that are bolstering spending on human resources, capital expenditure and research. The JPX/S&P Capex & Human Capital Exchange Traded Funds has risen 1.7% so far this year and is set for the biggest annual outperformance since 2018 versus the broad Topix index, which has fallen 5.1%.
The Bank of Japan said it would buy those types of ETFs in 2015 as part of a policy campaign to try to stop falling consumer prices. The funds put higher weightings on companies that are making efforts to boost their human capital spending, such as high payers like Keyence and Nintendo.