We’re proud to present the latest in our ‘Asian takeaways’ series, where we share local insights on what’s happening across Asia-Pacific. From India to Indonesia, from Taiwan to Thailand, we give our views on the dynamic changes across the region, while showcasing our learnings from being ‘on the ground’ at company and site visits.
Landing in Tokyo, we found the mood on the ground to be much more buoyant than during our last visit in March. This follows the announcement of the largest wage hike in 33 years, which should start to translate into real wage growth over the coming months, and some positive trends in consumption.
Broader consumer concerns surrounding a weaker yen appear to be dissipating (despite the currency’s recent direction of travel) as Japanese residents accept this “new normal” price hike environment, and whilst the correlation between the equity market and the yen seems to be diminishing, a weak yen brings with it underlying benefits such as rising corporate earnings, inbound tourism and increased foreign direct investment.
On the corporate side, our general takeaways were also broadly positive. March end interim results were encouraging, while governance reform also continues to be a central focus for Japanese corporates, with management mindsets refocusing on value creation.
In our full piece, we discuss:
Our visit to the western region of Kansai, home to cities such as Kyoto, Osaka and Kobe, and a well-established hub for businesses. Even in this area of deep-rooted values, companies are looking to adapt to Japan’s new corporate landscape.
How companies such as Nintendo and Asics, a sportswear company best known for its running shoes, are innovating, seeking to improve ROI and leverage intellectual property.
Our meetings with tech companies, which are seeking to increase automation with the aim of boosting productivity, and health care companies looking to prioritise R&D efforts.
Developments amongst Japanese retail investors who are steadily adopting Japan’s NISA (tax-free savings) scheme. As this gains traction, there is strong inflow potential for Japan’s equity market.
As the substantial changes that we are seeing in both the Japanese economy and the market continue, and corporate governance reform gathers momentum, we believe that the environment should be an interesting one for active stock pickers such as ourselves.