Japanese startups are catching up to broader market rally

The equity gauge for Japan's startup companies has rapidly increased its profits over the past few weeks, almost reaching the benchmark index. Investors are turning to smaller stocks for better chances to take advantage of the market's hottest upward trend this year.

The TSE Mothers Index has experienced an 18% increase so far this fiscal year. It's important to note that this is a smaller gain compared to the 21% increase in the Topix index. The Topix index is ahead of U.S. and global peers and includes major companies such as Toyota Motor and trading houses that Warren Buffet favors. On the other hand, the TSE Mothers Index is primarily driven by young companies that work on developing artificial intelligence, fintech, and human resources technology.

According to Masakazu Takeda, who works as a portfolio manager at Sparx Asia Investment Advisors, there are a few ways to earn some cash in Japan. One option is to invest your money into international companies that are based in Japan, as they may bring in a profit. Alternatively, you could try investing in small-cap companies that have creative business models, which could thrive in a country with an already-established economy.

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