Tokio Marine Asset Management

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At the beginning of the 1990s, Japanese stocks comprised 20% of the MSCI World Index. However, within 20 years this figure had dropped to around just 7%. Japan’s deflationary problem and the sluggishness of its stock market have reduced Japanese stocks to being a ‘niche’ asset class.

In addition, an ageing population and growing national debt have become widely acknowledged structural problems which have no quick fixes. Macroeconomic indicators still continue to lack dynamism despite the tailwind from Abenomics. Against this backdrop, it’s no surprise that there are still many long-term investors flocking to the Japanese stock market.

So, is Japan really going to follow a path of structural decline? We’d like to challenge the consensus and offer global investors a different perspective on the situation in Japan. Perhaps after 20 years, Japan has finally rid itself of deflation and a stagnating economy, and while there are indeed structural problems that could still stunt economic growth in the long term, restructuring that has been quietly taking place at the societal and corporate level may now be benefitting certain companies. It is these companies that we believe present interesting investment opportunities.

Tokio Marine Asset Management (TMAM), one of the largest active managers in Japan with approx. $54bn AUM and 30 years’ investment management experience, analyses the current environment in Japan and its evolving market.

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