00:00It seems like there's been a reversal of fortune for Japan.
00:03A lot of funds are putting their money into Japan.
00:06Is that sustainable?
00:07Do you see further upside from here?
00:10Yes, yes.
00:10We are seeing a lot of upside.
00:13And this is decomposed into three money flows.
00:17Many global investors investing into Japan,
00:20many Japanese investors investing into Japanese assets,
00:23and also Japanese investors investing in a global asset.
00:27So this will be contributing to the global capital flow for more growth.
00:32Isn't it true, though, it is the foreign funds that's driving this growth?
00:36Foreign funds have been putting money into Japan.
00:39Of course, it is one of the drivers.
00:42But the key driver is economic reform
00:45and the mindset of the executives or managers of Japanese corporations.
00:49So this is not just the money flow from international investors.
00:53This is more evolution of the company management in Japan.
00:58How much more upside do you think is there for the Nikkei?
01:02Yeah, it's a really difficult question.
01:04But in the past few years, it grew or increased the price around 15% per year.
01:11And of course, we cannot say 15 years every year going forward,
01:15but it will be double digit or higher single digit,
01:20depending on the short-term interest rate.
01:22If you were to hazard a guess, though, what would it be?
01:27If you were to make a guess how much it will grow,
01:30how much more upside for the Nikkei from here, what would it be?
01:33Is there a number?
01:35What will be a time horizon?
01:37Maybe in the next 12 months.
01:38Next 12 months, wow.
01:39Okay, yeah, maybe.
01:41Okay, let me be very bullish.
01:4360,000.
01:45Of course, there are some concerns,
01:47and that has to do with spending plans from the Takaichi government.
01:53Will that weigh on sentiment in Japan?
01:55Yeah, it is impacting a lot, sentiment and actual economy, a lot.
02:02So basically, we need to consider equity market, fixed income market, and FX market a little bit
02:09separately.
02:10Of course, we know those are interactions.
02:12Equity market, Ms. Takaichi, so Prime Minister Takaichi's expansive budget helps a lot.
02:21So that's why I'm really bullish.
02:23Fixed income, sometimes people are concerned about the fiscal concerns.
02:27But when we consider the interest rate, now 10-year government bond 1.75%, 30-year 3.3%,
02:36this is still a little bit lower than the potential.
02:40So this means FX market, interest rate will increase, but it is not just based on the fiscal concern.
02:49My guess is still market is exploring where is the equilibrium for those interest rates.
02:58And FX, this is really different from Mr. Abe or Prime Minister Abe's Abenomics.
03:05Abenomics has a clear intention to drive Japanese yen depreciation.
03:11But for this government doesn't have such kind of a clear intention.
03:15This means even Japanese yen hit 157 Japanese yen per dollar or so.
03:22It is still within the fluctuation, usual fluctuation.
03:26Usually, Japanese yen, US dollar FX rate have 10% volatility.
03:32So I believe this is something.
03:33And if you are the investor in Japan, actually, current depreciation Japanese yen is not the matter.
03:41You invest in the market three years, five years, 10 years.
03:44For this long term, Japanese yen may be more likely to be appreciated rather than depreciated.
03:53So as it stands now, forget about intervention in the yen, even though we're seeing a lot of weakness in the currency.
03:59Is that a fair assumption?
04:00Yes. Currency intervention may impact on the short term, but from long term investor, it's not.
04:06And in terms of the bond market, of course, all eyes on what the BOJ does.
04:12What expectations are there for a rate hike?
04:14Will we see one this year, next year? What are you anticipating?
04:19So, of course, they have their policy, but those policies will be impacted more actual economies.
04:27So it will be gradual increase in a short term interest rate.
04:32What are the risks that the market might be disappointed by a lack of action from the BOJ?
04:39I think it is a speed of the interest rate increase.
04:43And actually, already markets are a little bit disappointed, but that's our highest risk or uncertainty.
04:51I want to take a look at the performance of your parent company, Tokyo Marine.
04:57We've seen it slump 8% on the back of disappointing results.
05:02Can you reverse sentiment? What would it take to have the stock perform better?
05:08So let me talk a little bit about insurance industry globally.
05:15Basically, insurance industry globally is seeing significant upside because of, of course, insurance needs, but this is amplified by climate change.
05:28There are a lot of people who want to have more insurance.
05:32There are a lot of enterprises which want to have more insurance.
05:37So basically, for the next five years, 10 years, fundamentals for insurance business is very great.
05:44And for Tokyo Marine Holdings, this is not my company.
05:48This is my group, but basically, our top-line revenue, 50% of top-line revenue comes from international business.
05:59So Tokyo Marine have a really good point or positioning to capture or capitalize on the growth of the global industry.
06:09And we have new CEO, group CEO, Koike-san, this June, he will make significant evolution in the company.
06:18That's my guess.
06:19So the stock price is not quite reflecting the potential of the business, is that correct?
06:25Yes.
06:25It is something like just a reflection of the current past three years, really high performing of the stock price.
06:34But long term, even mid term, we are so bullish about the Tokyo Marine Holdings.
06:40There are a lot of facilities in the market right now.
06:42What's the biggest risk for your business?
06:45My business.
06:46So my business is capitalized on the global capital market.
06:50And then Japan market is one of the core business we have.
06:55And Japanese economy is one of the high beta country among global countries.
07:03So if there is a slowing down in the US, it is the biggest risk.
07:08And in terms of where money should be placed in the Japanese market, where should it be?
07:15Where's the best potential?
07:17What's the biggest opportunity in Japan?
07:18So people can think some themes like AI or defense industry, but more important perspectives when you invest more in Japanese market, it is company reform.
07:34How much extent the management can diversify or sometimes concentrate to enhance their business model.
07:42This is sometimes a mandate, sometimes restructuring.
07:45And also how much extent company executives care about ROI, return on investment, cost of capital.
07:54This is more impactful force for company performance.
08:01A lot of questions about wages and inflation as well.
08:03How big are these considerations for investors?
08:08That's all good.
08:09That's all good.
08:10We don't expect those inflation becomes too much.
08:14Some slight inflation is a catalyst for activating economy, company's performance.
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