May 15, 2024
Tracing our history to 1928, Wellington Management is one of the largest independent investment management firms in the world. We serve as a trusted adviser for institutions in more than 60 countries.
Japan equity: Reason to believe
What is driving Japan’s rally?
Japan’s equity market has extended its rally from last year. Symbolically, Japan's Nikkei 225 index hit a record high and surpassed the previous record set 34 years ago when the Japanese economy was at the peak of its real estate bubble.
We believe this rally is driven by global investors becoming more constructive on two structural themes in Japan:
- Corporate governance reform : While this initiative is already 10 years old, it still is a work in progress. As investors, regulators, and other capital market stakeholders ratchet up the pressure on companies to focus more on return on capital, management behavior is changing toward more effective use of its corporate balance sheet.
- The domestic economy's escape from persistent deflation : This is supported by robust wage growth and higher corporate pricing power, which were missing from Japan's macro picture over the past three decades.
Read the full article here .
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