Speaking at a roundtable on Friday, October 6, Japanese Prime Minister Fumio Kishida called on asset management giants like BlackRock to invest in "the future of Japan." Fumio Kishida said:
After decades of deflation and stagnant growth, Japan's economy and wages are growing again, while Japanese stock prices are near their highest levels in 33 years.
Larry Fink, the chief executive of BlackRock, says he sees echoes of Japan's 1980s "economic miracle" in the country's current economic transformation. Fink said:
Japan is going through a series of extraordinary economic transformations. It's similar to the miracle of the '80s. I expect the miracle to last longer.
Kishida told attendees that Japan would not hesitate to continue implementing the "Japanese Government policy". "The New Capitalist Executive Plan" Opening the way for a "new Japan," he hopes that Japan's 2,100 trillion yen of household savings will be more invested, thereby increasing the value of businesses, and in turn bringing benefits to residents in a virtuous circle:
We want you to make new investments in Japan's future. People at home and abroad have felt Japan's determination to transform itself into an international financial center.
Drew Edwards, senior portfolio manager for Japan at GMO's Usonian Equity Fund, says something positive is happening in the Japanese market:
"We will continue to see these constructive policies work over time."
But senior Japanese investors warn that the window for Tokyo to sustain global interest in the country is limited. Japan is currently benefiting from external factors such as global inflation (which has helped it escape its deflationary trap) and the wide interest rate differential between Japan and the United States.
As the US and European rate-raising cycle draws to a close, this means that if the interest rate differential between Japan and the US shrinks, the yen could strengthen from next year, making it look less of a bargain for foreign investors in Japan.
At the moment, Japan looks like a "sweet spot" for investment, according to the CEO of a large Japanese company, in part because many companies are changing. But people need to be convinced that this is long-term:
"The investors who are here this week are not here to trade Japan, they are looking to see if these positive factors that they see now will still be there three, five or even 10 years from now."
Some senior government officials believe the current opportunity may be Japan's last chance to attract large-scale investment flows into the Japanese market amid a global reallocation of capital. If we do not succeed in attracting sufficient external funding, we may miss the opportunity to achieve economic growth and market prosperity.
Fumio Kishida's ambition
The Japanese government, led by Fumio Kishida, this year unveiled a revised draft of its economic development strategy, known as "Kishida." "The New Capitalist Executive Plan" It aims to improve the labor market and promote economic growth. Some analysts pointed out that since Kishida came to power so frequently elaborated or mentioned the "new capitalism" and related economic issues, which also shows the importance of boosting the Japanese economy.
From an economic perspective, the "new capitalism" must not only solve the practical difficulties caused by the continuous decline of competitive advantage due to the continuous increase in labor costs and production costs, but also solve several problems such as ensuring the stable supply of important materials, preventing the "illegal outflow" of important technologies, and building a strong and resilient supply chain system.
On the other hand, from a social perspective, the "new capitalism" must deal with the continuously widening social gap between rich and poor and the challenges brought by many global issues such as climate change, and revitalize the economy while solving the "intractable disease" that has long plagued Japan's social development.
"Our economy has the opportunity to enter a new Goldilocks phase for the first time in 30 years," Kishida said. We must not miss this opportunity."
However, under the continuous deterioration of Japan's domestic demographic structure and the continuous pressure of foreign geopolitics, the capability requirements of the Japanese government are changing with The Times, the analyst pointed out that Japan lacks some necessary capabilities to achieve this goal, and efforts should be made in the following four aspects: (1) accelerate the spread of new technologies; (2) Making labor markets more flexible; (c) Further improve corporate and public sector governance; (4) Make the primary balance of payments higher than the net interest expense to improve Japan's fiscal efficiency.
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