Japan’s Comeback: Why the “Lost Decades” May Finally Be Ending
Speakers
Summary
- Japan is exiting a "lost 30 years" of deflation and stagnation, with inflation stabilizing near 3% and interest rates rising for the first time in decades.
- A structural shift in corporate governance is underway, driven by the Tokyo Stock Exchange (TSE), pressuring companies trading below 1.0x Price-to-Book (P/B) to improve capital efficiency or restructure.
- Demographics are forcing a massive capex cycle: Japan's shrinking workforce is necessitating aggressive investment in automation, AI, and digitization to maintain productivity.
- Apollo CEO Mark Rowan highlights a "generational change" where the massive pool of Japanese savings (previously dormant in cash/JGBs) must now seek higher returns in equities and alternative assets to combat inflation.
Trade Ideas
Inflation is at 3%, and rates are rising. Wadah explicitly says, "Cash is not the right assets to own." In a deflationary world, cash gains purchasing power. In an inflationary world (Japan's new reality), cash loses real value daily. Additionally, rising interest rates push bond prices (JGBs) down. AVOID holding excess Cash or long-duration Japanese Government Bonds (JGBs) as a store of value. Japan falls back into deflation, making cash king again.
Rowan identifies massive long-term capital needs: "This is manufacturing. This is energy. This is AI and data. This is infrastructure... measured in trillions." The "re-industrialization" of Japan and the build-out of AI capabilities require physical infrastructure. The grid, power generation, and data centers are the "picks and shovels" required before the digital economy can function. LONG Infrastructure and Energy sectors supporting the AI/Data buildout. Regulatory hurdles in energy policy or supply chain bottlenecks.
Mark Rowan
CEO, Apollo Global Management (APO)
Japan has moved from deflation to ~3% inflation. AG Wadah states, "Cash has been the king... But with the inflation out there close to 3%, cash is not the right assets to own... Stocks are the [better] assets." For 30 years, Japanese households and corporations hoarded cash because goods got cheaper. Now, inflation erodes cash value. This forces a massive rotation of capital out of savings/bonds and into the equity market to preserve purchasing power. LONG Japanese broad market indices. DXJ is preferred if the Yen weakens; EWJ for unhedged exposure. A return to deflation or global recession crushing export demand.
Hiromi Yamaji
Group CEO, Japan Exchange Group (JPX)
Japan faces a severe labor shortage due to aging. Yamaji states, "Japanese companies has been making huge investment into automation or digitization... very important to enhance productivity." The labor shortage is not a headwind but a capex driver. Japanese industry must automate to survive. This guarantees sustained demand for robotics, industrial automation, and AI software providers servicing Japanese corporates. LONG Robotics and AI automation themes with exposure to Japanese industrial capex. High implementation costs or slower-than-expected technological adoption.
Up Next
This Bloomberg Markets video, published February 21, 2026, features AG Wadah, Mark Rowan, Hiromi Yamaji discussing JGB10Y, CASH, ITB, EQIX, XLE, NKY, EWJ, DXJ, BOTZ, ROBO. 4 trade ideas extracted by AI with direction and confidence scoring.
Speakers: AG Wadah, Mark Rowan, Hiromi Yamaji · Tickers: JGB10Y, CASH, ITB, EQIX, XLE, NKY, EWJ, DXJ, BOTZ, ROBO