News & Insights

Business performance of Japanese companies is clearly bottoming out due to self-reliant reforms implemented during the COVID-19 pandemic as the economy gradually picks up. Earnings and share prices had been affected by the sensitivity of their business structure to COVID-19, but going forward, performance will depend on their efforts to proactively make changes.

This month's commentary covers the following as move towards year end 1) Asian countries will lead the global economic recovery. 2) The Japanese economy will recover supported by rebound of consumption 3) The BOJ’s accommodative policy as well as expansionary fiscal policy will continue. 4) We will see the Nikkei 225 testing 29,000 by end-2021

Japan faces enormous challenges with its declining and aging population. In order to improve economic efficiency and raise the potential growth rate, it must promote digitalization through innovation. While digitalization is the pillar of “Suganomics”, in the short term, the government has to develop infrastructure towards a digital society.

Prime Minister Suga’s near term policies will focus on tackling COVID-19, but his basic policies will follow where Abe left off. However, Suga faces numerous challenges that include income disparity and distribution policy. Suga’s economic policies must not counterpose his growth strategy with his income and distribution policy. Rather we would expect his income and distribution policy to reinforce his growth strategy. We hope to see the Suga Administration fully support and enforce these policies under the “4th Arrow”.

Japan's real GDP growth rate for April-June 2020 fell 28.1% QoQ annualized, the largest drop ever recorded. The impact of the measures against COVID-19 taken in Japan and overseas to forcibly suspend economic activity has directly hit both domestic and external demand.

In this commentary, we look back at the shareholders' meetings held in June 2020 under COVID-19, and discuss its features, changes, and the efforts to improve corporate governance by Japanese companies.