Japanese stocks have been an attractive option for investors looking for exposure outside of U.S. stocks. There have been many factors triggering the multi-year run, including corporate governance reform, record shareholder returns, and a weak yen.
The governance overhaul began with Japan's Stewardship and Corporate Governance Codes in 2014–15. This pushed companies to prioritize shareholder value over the old habits of cash-hoarding and cross-shareholdings—where companies held each other's stock to cement business relationships rather than generate returns.
