Fidelity: Eyes of Asia on Japan and India

In Japan, consumption is booming as a spillover effect of wage increases, which may cause further price increases. The mood of households is starting to shift from saving to spending, and this will have wide-ranging and lasting effects. At the same time, Japanese corporate governance reforms are releasing additional stock market values. Companies place more emphasis on dividend payments and share buybacks. The shareholder return profile of the Japanese market may improve faster than that of most other developed markets. With policymakers increasingly confident that the country’s mild inflation has reached sustainable levels, it is only a matter of time before the Bank of Japan further loosens its already ultra-loose monetary policy and abandons its yield curve control policy altogether. This monetary normalization will help attract investors to the local bond market.