2019 is likely to be a good year for Japan. However, there are some outlier scenarios investors may worry about. Improbable as they may seem, any movement toward their far-out direction will force a true about-face in the current consensus. Jesper Koll outlines 10 potential surprises for Japan in 2019.
The key issue for Japan’s 2019 outlook is not the hike in the consumption tax coming October 1 but the determination of “Team Abe” to present a new, urgent and credible structural reform agenda. Herein lies the key to unlock Japanese markets out of the current “value trap” consensus.
The arrest of Nissan’s Carlos Ghosn underscores a key principle of Japanese corporate governance: greed and manipulation for personal gain will not be tolerated. Jesper Koll discusses how the high-profile Ghosn case can serve as an important case study for what good governance and good regulatory policing requires of corporate leaders in Japan.
The drop in Japan’s third-quarter GDP does not mark the start of a recession, but it does underscore that neither the Bank of Japan nor fiscal policy has room to change. Jesper Koll explains three fundamental trends to watch for.
Japan is not a value trap. Our analysis suggests the probability of a sharp positive inflection in earnings visibility is about to be delivered in Japan, possibly as early as the upcoming fiscal half-year results season, which is about to get going by the end of October.
Jeremy J Siegel
Senior Investment Strategy Advisor
CEO of WisdomTree
Jeremy Schwartz, CFA
Executive Vice President, Global Head of Research
Christopher Gannatti, CFA
Head of Research, Europe
Christopher Gannatti began at WisdomTree as a Research Analyst in December 2010, working directly with Jeremy Schwartz, CFA®, Director of Research. In January of 2014, he was promoted to Associate Director of Research where he was responsible to lead different groups of analysts and strategists within the broader Research team at WisdomTree. In February of 2018, Christopher was promoted to Head of Research, Europe, where he will be based out of WisdomTree’s London office and will be responsible for the full WisdomTree research effort within the European market, as well as supporting the UCITs platform globally. Christopher came to WisdomTree from Lord Abbett, where he worked for four and a half years as a Regional Consultant. He received his MBA in Quantitative Finance, Accounting, and Economics from NYU’s Stern School of Business in 2010, and he received his bachelor’s degree from Colgate University in Economics in 2006. Christopher is a holder of the Chartered Financial Analyst designation.
Head of Fixed Income Strategy
Tripp Zimmerman, CFA
Head of Fixed Income & Currency
Associate Director, Asset Allocation and Modern Alpha
Head of Capital Markets
Associate Director of Capital Markets
Head of Europe
Joseph Tenaglia, CFA
Associate Director, Asset Allocation
Kara Marciscano, CFA
Jianing Wu joined WisdomTree as a Research Analyst in October 2018. She is responsible for analyzing market trends and helping support WisdomTree’s research efforts. Previously, Jianing completed internships and projects at Geode Capital, Starwint Capital, and Invesco Great Wall Fund Management with a focus in quantitative research. Jianing received her M.S in Finance from the Massachusetts Institute of Technology. She graduated with honors from Boston College with degrees in Mathematics and Philosophy.
Jeff Weniger, CFA
Director, Asset Allocation
Alejandro Saltiel, CFA
Associate Director of Modern Alpha
Alejandro Saltiel joined WisdomTree as a Quantitative Research Analyst in May 2017. He is responsible for quantitative research on WisdomTree’s products and global equity markets. Prior to joining WisdomTree, Alejandro worked at HSBC Asset Management’s Mexico City office as Portfolio Manager for multi-asset mutual funds. He started his career working at a boutique hedge fund that specialized on trading options on sector-levered ETFs. Alejandro received his Master’s in Financial Engineering degree from Columbia University in 2017 and a Bachelor’s in Engineering degree from the Instituto Tecnológico Autónomo de México (ITAM) in 2010. He is a holder of the Chartered Financial Analyst designation.
Matt Wagner, CFA
Modern Alpha Analyst
Matt Wagner joined WisdomTree in May 2017 as a member of the Research team. He is responsible for research on WisdomTree’s products and communicating the firm’s views on the markets. Matt started his career at Morgan Stanley, working as an analyst in Treasury Capital Markets from 2015 to 2017 where he focused on unsecured funding planning, execution and risk management. Matt graduated from Boston College in 2015 with a B.A. in International Studies with a concentration in Economics. Matt is a holder of the Chartered Financial Analyst designation.
Last Friday, the Bank of Japan decided to adjust monetary policy. The policy board voted to keep constant the quantity of balance sheet growth ay Y80 trillion per annum; but it voted to change the “quality” of its future asset purchases.
It is the time of year when economists and strategists present their forecasts and baseline scenarios for the year ahead, 2016. Quantitative forecasts are based on de facto probability models, and qualitative scenarios are based on, well, a combination of experience and common sense. Either way, most methodologies leave little room for a discussion of true outliers and surprises.
Last week, Japanese prime minister Shinzo Abe presented an update on his economic policy priorities for 2016 and beyond. The new details of Japan’s “Abenomics 2.0” policy discussion suggest to us that structural growth policy is very much moving in the right direction, with Team Abe making concrete progress on building credible alliances with business leaders for his growth strategy.
The Bank of Japan decided to maintain its steady policy course this week, very much in line with consensus expectations. However, its policy statement did add a twist to a previously mentioned sentence.