May 2019

The Reiwa Era is here!

This week’s news from Japan has all been about change at the very top. After 31 years of peace, Emperor Heisei (often translated as peace everywhere) has stepped down. The last time a Japanese Emperor abdicated the throne was more than 200 years ago. Emperor Heisei or Akihito, to give him his birth name relinquished the throne on Tuesday, April 30th to make way for his son, Naruhito. Crown Prince Naurhito is now Emperor Reiwa (beautiful harmony).

But what does this mean for the average person in Japan? Well for a start 10 days of no work! Yep, you read that correctly, a HUGE deal for Japan, a country with a word for death by overwork! The planned changing of the Emperor meant that timing could fall within “Golden Week” when four national holidays fall in a row. By adding on a few new days for the new Emperor and the weekends we enjoyed 10 days of no work, quiet morning trains and a real sense of happiness in the air.

How long will this last? Of course no one knows. The new Emperor is being touted as a man of the people. But his people are facing some real challenges. Emperor Heishi led Japan through some of the worst natural disasters the country has ever seen. The Hanshin Earthquake of 1985 and the Tohoku Earthquake and Tsunami of 2011 as well as numerous large typhoons and flooding. And quietly behind all of this, a massive shift of wealth from the many to the few happened during the Heisei period. The Heisei period began in January 1989, and a few short years later the Japanese economic bubble burst in 1992.

As investors, we know that change brings opportunity. The Japanese asset bubble bursting in 1992 sent regular Japanese running from real estate investment, sprinting away from stocks and shares and diving for cover from any bond or currency investing. Where did they go? The average Japanese stuck all their available cash into the post office! I kid you not. Now 30 years later the Japanese post office is one of the largest saving organisations in the World paying 0.000001% interest (my estimate!) to those savers.

So what happened to all the real estate and other investments? Big Business happened. Unlike average Japanese, businesses know the difference between assets and liabilities and slowly bought up as many real estate investments as they could over the years. Leaving the avergae person to ‘invest’ in their own home, which we know is the very lowest investment an average person can make.

So back to our new Emperor Reiwa. He does appear to be a man of the people, he married a commoner, he raised his own children and this article even suggests he did his own laundry!!!

Economically Japan has some real issues around ageing population, restrictive labour laws, ageing infrastructure. But Japan also has real resilience, perseverance and good old gumption.

The Emperor alone does not rule Japan, in fact he has very little power but I for one am looking forward to what Reiwa brings. I know at JPI it will bring more investment in Japanese Real Estate and great partnerships for you, me and Sim.

Join us to “invest together, grow together” in this new exciting Reiwa Era.