Outlook on Japan: April 2023

Outlook — Corporate

April 10, 2023


Lazard's Outlook series provides a forward-looking view, over the short, medium, and/or long term, of asset classes, sectors, regions, or countries from the view of Lazard Asset Management. In this edition, LAM portfolio managers share their outlook for Japan in Q2 2023. 


2023 started on a positive note as expectations of an economic soft landing for the United States increased along with heightened prospects of a recovery in Chinese economic activity.

However, this reprieve was short-lived as March's banking turmoil set off financial contagion concerns which we believe, in the near term, may affect the Japanese financial sector. We also believe, though, that the more pertinent issue for Japan will be inflation.

  • The Japanese financial system is, overall, the healthiest it has been in the past 40 years; the largest Japanese banks have strong retail deposit bases and higher liquidity coverage ratios than do the largest U.S. banks.

  • In the near term, we believe the Japanese financial sector will likely be subject to concerns about financial contagion following the run on U.S. banks, but we think the more pertinent issue is inflation.

  • Japan’s Shunto, the annual spring wage negotiations, is pointing to the highest wage hikes since the early 1990s, which we believe will press the Bank of Japan to further normalize monetary policy.

  • In January, the Tokyo Stock Exchange announced plans to put further pressure on listed companies to meet its higher standards or face de-listing, continuing to advance corporate governance reforms and address inefficiencies.

Click here to read our Outlook on Japan in Q2 2023.

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