Japan CAPE Ratio
Current Japan CAPE
As of August 2026 · ratio
Source: EWJ — iShares MSCI Japan ETF
Rough estimate. This single-country CAPE is approximated by rolling the EWJ ETF price from a recent anchor — free data has no per-country 10-year earnings — so treat it as a directional gauge, not a measured CAPE. It is bounded and is not used in the headline Global CAPE. See the methodology.
By Dominic Roe · Data Engineer & Business Intelligence Developer Updated August 2026
Is Japan cheap right now?
✓ Real · EWJOn 4 of 4 trailing multiples, Japan equities are priced below the all-world index (VT). These are current, fund-reported figures — not the estimated CAPE series charted below.
| Measure | Japan | World |
|---|---|---|
| P/E | 19.1 | 22.6 |
| P/B | 1.94 | 3.32 |
| P/S | 1.66 | 2.55 |
| Dividend yield | 3.86% | 1.59% |
| ROE (quality) | 10.2% | 14.7% |
Green = cheaper than the world index on that measure. ROE is shown as context, not cheapness: a lower return on equity means part of a cheap multiple may be deserved rather than a bargain.
Against its own history, Japan's estimated CAPE of 36.2 sits at the 100th percentile — historically expensive for Japan — above most of its own past readings.
Multiples as of August 2026.
- Historical average
- 20.4
- 365 months
- Historical median
- 19.6
- Percentile rank
- 100th percentile
- vs full history
- All-time range
- 11.8 – 36.2
- Last updated
- August 2026
- since April 1996
Understanding this metric
What is it?
The Cyclically Adjusted Price-to-Earnings ratio (CAPE), also called the Shiller P/E or PE10, measures how expensive Japan equities are relative to their inflation-adjusted earnings over the prior ten years. By averaging a decade of real earnings it smooths out the booms and busts of the business cycle, giving a steadier read on valuation than a one-year P/E.
How is it calculated?
CAPE is computed by dividing the real (inflation-adjusted) price of the Japan equity market by the average of its real earnings over the trailing ten years. Both price and earnings are expressed in today's currency using a consumer price index, so a CAPE of 25 means investors are paying 25 times a smoothed, inflation-adjusted measure of annual earnings.
Historical interpretation
Historically a high CAPE has been associated with lower subsequent long-run real returns, and a low CAPE with higher returns. It is a valuation gauge, not a market-timing signal: rich valuations can persist or grow richer for years. Compare today's reading to the metric's own history — its average, median and percentile rank — rather than to a single "fair value" number. Japan is a textbook case for reading CAPE alongside the live trailing multiples shown above the chart. Japanese equities have long traded at a low price-to-book ratio and a comparatively high dividend yield versus the all-world index — a structural "cheap" signature rooted in a market weighted toward banks, automakers, trading houses and heavy industry rather than high-margin technology. The offset is quality: Japan earns a lower return on equity than the United States, so part of the discount is deserved rather than a free lunch. The most useful read combines the CAPE percentile (how Japan is priced against its OWN decade of history) with those cross-market multiples before concluding the market is cheap.
Limitations
CAPE has well-known limitations. Accounting standards, payout policies, profit margins, interest rates and sector composition all change over decades, which can shift the "normal" range upward or downward. The ten-year window still includes unusual periods (such as a deep recession) that distort earnings. CAPE says little about the next year and should be combined with other metrics rather than used in isolation. This series is an ESTIMATE, not a measured CAPE. Free data does not include long-history, per-country 10-year real earnings, so it is built by anchoring a recent CAPE level and rolling it through history using the inflation-adjusted price of the iShares MSCI Japan ETF (EWJ) with a steady real-earnings trend removed. History only extends as far back as the country ETF (typically the late 1990s/2000s). Treat it as a directional valuation gauge. See the methodology documentation for sources and assumptions.
Frequently asked questions
Is the Japanese stock market cheap right now?
On the current, fund-reported trailing multiples shown above, Japanese equities are priced below the all-world index on price-to-book and offer a higher dividend yield, while sitting closer to the world on price-to-earnings. Read that against the CAPE percentile — how Japan is valued versus its own history — rather than treating a low multiple as cheap on its own.
Why does Japan have such a low price-to-book ratio?
Book value depends heavily on sector mix. Japan's market is weighted toward banks, automakers, trading houses and heavy industry — businesses that carry large tangible asset bases and structurally trade near book value — rather than the asset-light, high-margin technology firms that dominate the US index. A low price-to-book is therefore partly structural, not automatically a bargain.
How does Japan's valuation compare to the US and the world?
Japan typically trades at lower price-to-book and price-to-sales multiples and a higher dividend yield than both the US and the all-world index, but it also earns a lower return on equity. The valuation gap and the quality gap move together, which is why the comparison above shows ROE as context beside the cheapness measures.
Is the Japan CAPE figure a measured ratio?
No. Only the US CAPE is a measured series (from Robert Shiller). Japan's CAPE here is an estimate built from a free ETF price proxy and a recent anchor, so treat it as a directional valuation gauge. The trailing P/E, P/B, P/S and dividend yield shown above, however, are real, current figures reported by the country's tracker fund.
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