Advantages of investing in Japan
- Political stability as a comparative advantage
Unlike some other countries, Japan now has the political stability and key policymakers in place to push through plans to revive the economy – both Abe and Kuroda are set to stay in office for the next three years until 2018. For the first time in a decade, Japan has a leader with the necessary political strength to carry out major reforms to revitalise the economy and the cooperation of the BOJ who remain firmly committed to reintroducing inflation.
- Evolution of Corporate Governance
The introduction of the Stewardship and Corporate Governance codes are already having an effect and should encourage companies to achieve sustainable growth in the long run through better governance.
- Tokyo Olympics in 2020
Infrastructure, particularly in Tokyo, dating back to the 1960s (the last time Japan held the Olympics) sorely needs to be upgraded and new construction work should continue to accelerate leading up to the Olympics.
- Domestic Buyers of Japanese Equities
Japanese pension funds (first public, now private) are allocating a greater portion of their assets to equities and this in turn is filtering through to the retail space, where Japanese equity funds were ranked in the top 15 largest new funds in the first half of 2015.
- Return to Inflation for the First Time in 25 Years
A deteriorating labour balance in the late 1990s triggered Japan’s slide into deflation. However, with rising wages owing to a tighter labour market and support from the BOJ’s on-going QE programme, we are seeing signs of a return to inflation after all this time.