There are two reasons why investors cannot ignore the Japanese stock market. The first is that the market is often driven by factors peculiar to Japan itself, such as perceptions of structural reform. This means that it frequently behaves in a different way to other major markets.An exposure to Japan therefore has the potential to make a significant contribution to the diversification of a global investment portfolio. Second,Japan is home to companies that have the potential to deliver superior returns to shareholders.These include "world beating" groups in the auto and consumer electronics industries, together with companies that are leading suppliers of capital goods equipment.