Japan's Prime Minister Fumio Kishida, at a Bloomberg event on the future of the country's asset management industry, said the market reforms that have propelled Japanese stocks to some of the strongest gains in global markets over the past three years will continue after he steps down over the coming month.
“I’m completely confident that the Japanese government will continue to engage with financial sector stakeholders” to further reforms aimed at promoting a shift from bank deposit savings to market investments," Kishida said.
To that end, an asset management forum comprised of leading Japanese and U.S. asset management companies, under discussion over the past year, will be launched on Oct. 3 in Tokyo, the prime minister noted.
The positive response of foreign money managers to the reforms of recent years, and hopes for even more progress ahead, effectively made Kishida’s summation of his three years as prime minister part victory lap and part effort to reassure.
Among his accomplishments, Kishida noted the fast growth of the Nippon Individual Savings Account (NISA), tax advantaged investment program.
Stefanie Drews, president of Nikko Asset Management, speaking at the event, said with flows into NISA during the first quarter of 2024 outstripping flows for all of 2023, the program should already be judged a success — and liable to reach the government’s goal of doubling in five years in half that time.
And cross shareholding — the intricate web of ownership stakes among companies belonging to the same industry groupings, cited by foreign companies over the decades as a barrier to competing in Japan — has become “a thing of the past,” Kishida said.
Still, he conceded, corporate and market reforms remain a work in progress.
In comments at the event, Kishida invoked the spirit of the Star Trek franchise's Capt. James T. Kirk, calling on foreign investors and money managers to “invest in Japan like no one has done before.”
A panel of high-powered asset management executives at the event seemed open to doing just that. Big private markets players in particular accessed the opportunities on offer now in Japan.
“We’ll probably buy — between companies and real estate — something like $20 billion of assets, which is significant and reflects the fact that there’s just much more openness,” said Jonathan Gray, president and chief operating officer of Blackstone, on a panel discussion ahead of the prime minister’s comments.
A Blackstone spokesman couldn’t immediately say how much Blackstone has invested in Japan over the most recent three-year period.
Blackstone’s Gray said that as a result of changes in government policy aimed at promoting Japan’s asset management sector, local companies have become open to selling off non-core businesses, leading to a flurry of activity at Blackstone.
“It feels great. There’s a real excitement about Japan and investing in Japan,” he said.
“What we’re seeing is just a fundamentally different landscape in terms of the ability to execute and be a partner to corporate Japan in terms of non-core assets,” said KKR co-CEO Joseph Bae. “I think we’re in the very early innings of that trend.”
And “there’s a lot more to go,” said Bae, predicting the transition underway in Japan now “from a savings economy to an investment economy” is poised to unleash “enormous economic activity” in the country.
“If you can start migrating those capital flows from savings to deposits in investment, whether it’s real estate, public equities (or) private credit,” Japan has an enormous opportunity to continue its growth trajectory, Bae said.
