Japan

In 2020 the COVID-19 pandemic negatively affected a wide variety of Japanese assets, including the real estate investment trust (J-REIT) market. J-REITs have bounced back since, but their recovery has been sluggish compared to the Japanese equity market’s rebound. Despite the slower recovery, we believe J-REITs have ample upside room once the rise gathers pace.

We discuss Japan’s robust manufacturing sector and why it is not about reclaiming the past; we also take a look at the BOJ’s ETF purchases amid the current rally by equities.

We look into the potential economic impact of Japan’s attempt to become carbon neutral. We also analyse why Japan’s fiscal condition draws little attention although the country is on course to spend a record amount in its upcoming budget.

We believe 2021 will be remembered as a year that marked the beginning of the end of the COVID-19 crisis as the world develops vaccines to counter the pandemic. In Japan, we expect a gradual recovery of its economy in 2021, as the pandemic’s impact lessens, and economic activity normalises.

The global markets surged in 2020 despite the COVID-19 pandemic. While we expect the liquidity-driven rise to continue for a while, we should be prepared for the tide to eventually turn. We identify Japanese industries, notably “Delta ESG” stocks, that could become sources of alpha in the post-pandemic world.

Japan struggles with an aging and shrinking population and it is important for the country, both from an economic and social perspective, to improve its relatively low labour productivity by efficiently utilising its human resources.

We discuss the reasons behind the Japanese equity market’s recent outperformance and the factors likely required for the gains to be sustainable in the longer term. We also assess the recent surge by the Mothers Index and key points to watch going forward.

With the global outbreak of COVID-19 in the first half of 2020, the world was turned upside down. Under such circumstances, Japanese companies are now faced with new challenges to adapt to this “new normal”.

Yoshihide Suga, Japan’s new prime minister, is widely expected to retain his predecessor’s fiscal and monetary policies known as “Abenomics”.

Clearly, it remains difficult to predict events in this volatile environment, but in the interest of our clients, we do our best and fortunately this time, we had virtually unanimous agreement on a similar scenario as in June, both politically and economically.