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(Bloomberg) — Japan’s startup equity gauge is outperforming the broader market by the most in over four months, as investors shift focus into domestic small and mid-cap stocks that benefit from yen strength.
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The Tokyo Stock Exchange Growth Market 250 Index, formerly known as the Mothers Index, rose 3.4% over the past month compared to a 1.7% decline in the overall Topix Index. The smaller index holds tech startups and companies that have domestic revenues, which tend to do better when the yen is stronger.
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“Real wages and GDP have been going up and with exchange rates swinging so sharply, there is focus on domestic related stocks,” said Naoki Fujiwara, a senior fund manager at Shinkin Asset Management. “Overall funds are shifting from large-cap stocks to small and mid-cap stocks,” he added.
The index rose as much as 4.1% on Monday, though Fujiwara warned the move may be short-lived as there is still caution among investors on how fast the Bank of Japan could raise interest rates, which would essentially turn the tide back toward large-cap value stocks.
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