Boj

Two reflationist academics, Toichiro Asada of Chuo University and Motohiro Sato of Aoyama Gakuin University, have been nominated to the Bank of Japan’s Policy Board. The market’s initial reaction was straightforward: the Takaichi government is signalling that it wants to slow rate hikes. The yen weakened, stocks rose, and long-dated bond yields steepened. A textbook reflationist repricing. But there is another way to read these appointments. And which reading proves correct has meaningful implications for how you position in Japanese equities. ...

The Japanese yen has weakened dramatically against the dollar and the euro over the past four years, falling from roughly 110 to the dollar in early 2021 to above 155 by late 2025. For Japanese investors, this has been painful. For American and European investors, it may be something quite different: an entry point. Currency movements are notoriously difficult to predict, and anyone who claims certainty about where the yen is headed should be treated with scepticism. But the structural forces that drove the yen to multi-decade lows are beginning to shift, and investors who understand those forces can make a more informed judgement about whether yen-denominated assets belong in their portfolio. ...