Home BusinessEconomic News Tokyo courts world’s investment royalty with ‘Japan is back’ message

Tokyo courts world’s investment royalty with ‘Japan is back’ message

by Janessa Lee

Japan’s Prime Minister, Fumio Kishida, has been actively promoting his country as an attractive investment destination for global investors. With a recovering economy, stronger wages, and a booming stock market, Kishida believes that now is the time for investors to turn bullish on Japan. He has also highlighted the country’s plans to shake up its asset management industry and expand tax-exempt investment vehicles, which could unlock trillions of dollars in household savings.

Kishida’s pitch has resonated with top executives from BlackRock, KKR, Blackstone, and sovereign wealth funds, who recently attended a dinner hosted by the Prime Minister. The sense of optimism among these investors is widespread, but there are concerns that the window of opportunity for sustained global interest in Japan may be limited.

External factors such as global inflation, the interest rate gap between Japan and the US, and geopolitical uncertainty over China have played a significant role in Japan’s recent economic success. However, investors are now looking for reassurance that these positive conditions will persist in the long term.

The Japanese government has also faced challenges in supporting its currency, stock, and bond markets, with interventions and monetary support becoming necessary. This highlights the underlying vulnerabilities that investors need to consider when assessing Japan as an investment destination.

Another challenge for Japan is the reluctance of domestic investors, such as life insurers and pension funds, to increase their exposure to domestic equities. Despite the positive changes happening in Japan’s economy and corporate landscape, many international managers are still underweight on Japanese equities due to past weak performance.

To sustain global interest in Japan, the country needs to generate internal growth and not solely rely on external factors. As central banks in the US and Europe near the end of their rate hike cycles, the yen could strengthen, making Japan less attractive to foreign investors.

While Kishida continues to promote Japan’s attractions to foreign investors, he also emphasizes the need for the country to transition from decades of cost-cutting to investment in human capital. By seizing this opportunity, Kishida believes Japan can enter a new phase of economic growth and development.

Overall, there is a growing sense of optimism about Japan’s prospects among global investors. However, the country needs to address challenges, attract domestic investment, and take advantage of its current favorable external conditions to sustain long-term interest from global investors.

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