Japan Remains a Key Theme for Global Investors

Neuberger Berman's Japanese equities team engaged with over 70 clients across 30 cities in Europe and North America to discuss investment opportunities in Japan. The interest among North American clients increased significantly, reflecting strong engagement from various institutional investors.

The team emphasized that Japan's transformation has just begun, presenting a compelling case for mid- to long-term investments in Japanese equities. Factors such as the Tokyo Stock Exchange's push for higher capital efficiency have led to record stock repurchases, signaling a proactive approach to enhancing return on equity.

Additionally, Japanese companies are taking meaningful steps to foster long-term value, including divesting unprofitable divisions and increasing investments in R&D and capital expenditures. The macroeconomic outlook is promising, with signs of sustainable inflation and rising wages, supported by robust corporate pay raises and tourism growth.

While some clients expressed concerns about yen weakness due to interest rate differentials, Neuberger Berman predicts that narrowing spreads could present favorable opportunities for both currency and equity investors in Japan.