North American and European institutional investors are optimistic about investing in Japan, encouraged by Prime Minister Shinzo Abe’s ‘Third Arrow’ policies and by positive momentum in Japan’s corporate governance landscape, according to the latest survey from BNY Mellon.
According to Investor Sentiment on Japanese Reform, 65 percent of surveyed investors find Abe’s ‘Third Arrow’ structural reforms as the most compelling aspect about investing in Japan, while 40 percent cited the policies’ ineffectiveness in revitalizing the Japanese economy as the biggest risk.
In particular, survey respondents believe the introduction of Corporate Governance and Stewardship Codes are key drivers to spur change in corporate governance practices and drive higher shareholder returns. Independence of board directors (65 percent) and return-focused capital policy (60 percent) emerged as the most important components of the Codes to investors surveyed.
Some 60 percent of respondents said the negative interest rate environment did not affect their investment stance towards Japan, despite concerns over its effectiveness in bolstering the economy.