It’s a real shame – not only for the athletes competing on the world stage, but also for Japan’s budding tourism industry.

Tourism has been a big focus of the Japanese government in recent years. In an effort to attract more visitors and spur the nation’s overall economic growth, visa requirements have been eased, duty free programmes expanded, and customs and immigration rules all changed.

And it was working – the number of visitors to the country tripled in the five years before the pandemic struck.

When will the tourists return?

“I lose track of how many disappointed questions I have answered about the lost opportunity of hosting the 2020 Games,” John-Paul Temperley, deputy manager of AXA Framlington Japan fund, told me. “All that infrastructure investment, transport upgrades, new hotels, English language sign-posts… as the invoices are filed away at the Ministry of Finance, surely many Japanese will ask the same question: Was it worth it, and what have we gained from winning the bid all those years ago?

“And yet, in time, I believe people will come to realise that it was not a complete waste. Japan was looking tired as a nation as it entered this last decade. Add to that the horrific impact of the Fukushima earthquake and nuclear disaster, and we can begin to see that the investments that have been approved ahead of Tokyo 2020, may prove a longer lasting legacy than currently envisaged.

“Indeed, if the sport itself doesn’t quite offer the normal fanfare of previous showcases, and the closing speeches refrain from calling this Olympics the ‘best ever’, there may be hope left in the end. Future visitors, and locals too, will sit in the new subway cars and admire the facilities on offer, and think: What a pity the Games weren’t the spectacle we hoped for, but thank goodness they spent the money on these lovely facilities all the same.”

Richard Kaye, co-manager of Comgest Growth Japan, also believes tourism will take off again soon. “The domestic travel business is massive in Japan,” he said. “After the first wave, the government paid for a domestic travel campaign and 76% of pre-Covid levels returned.

“Japan was also part of a number of international travel bubbles last year and will probably be so again. I believe tourism will come back quickly once the population has been vaccinated and Japan now has the infrastructure in place to be able to accommodate the larger numbers.”

Investment opportunities in Japan

I was one of those hopeful tourists because Japan is a place I’ve always wanted to visit. From its bullet trains to cherry blossoms, century-old temples to modern day architecture, it’s a country, landscape and culture that has always fascinated me. For now, I’ll have to make do with the investment opportunities – of which there are plenty.

Japan is the home of many strong global brands. From cars to electronics, its companies are known world-wide. And there is increasing opportunities for investors in those firms that are now benefiting from better demographics and the rising middle class in Asia.

Not only that, but there are plenty of secular investment themes that have been given an accelerated boost by the pandemic – even the most conservative Japanese businesses have been forced to move online. This opens up opportunities in a wide range of areas including e-commerce, software-as-a-service, digital payments, wealth management, insurance and real estate.

Anyone looking to invest in the country might like to consider FSSA Japan Focus, which invests predominantly in large and medium-sized Japanese businesses. Those with a higher risk threshold may prefer T. Rowe Price Japanese Equity, which invests in companies of varying sizes but tends to have a slight bias towards smaller firms.

Income investors may like to consider Baillie Gifford Japanese Income Growth, which aims to benefit from the improving corporate governance in Japan, as more and more businesses move towards a progressive dividend-paying policy.

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and fund managers and do not constitute financial advice.

Juliet Schooling Latter, research director, FundCalibre