Ongoing recovery & Dovish BOJ = Long TOPIX Small

To capture some benefits from the domestic recovery in Japan after the COVID-19 outbreak subsides, Japanese Small & Mid Cap stocks could be an interesting idea to explore.

Also with USDJPY recently reaches new high over multiple years, fluctuation in USDJPY might not be good for Large cap stocks. Another concerns for Large cap could be global growth uncertainty which tend to hurt Large cap. Japanese MNC firms more than Small & Mid Cap.

Comment:

Those who entered with some profits could consider gradually take profits. Nonetheless, investors could also let profits run and keep eyes on how the BOJ will react at incoming meeting as well.

At this point, I would think the risk-reward might not be quite compelling for those who consider about entering due to 1) potential turn in the BOJ's monetary policy to become more hawkish in Q3/2023 2) global economic slowdown which could affect Japan's economy as well but domestic economy could be quite resilient from tourisms recovery ...so must be quite selective in stock selections and 3) lacking of positive factors to drive earnings expectation much higher.