Episode summary
Japan’s Comeback: Why the “Lost Decades” May Finally Be Ending
Wall Street Week
· · Guests: Marc Rowan, Hiromi Yamaji, Mireya Solís
Summary
Japan’s long period of stagnation is being recast as a transition rather than a dead end. The host traces how the asset bubble burst in the 1990s, how deflation and negative rates followed, and how the economy spent decades trapped near zero growth while the Nikkei failed to make new highs for 34 years. The central argument is that inflation’s return, along with higher rates, is changing behavior: cash is no longer the default store of value, and companies are being pushed to use capital more efficiently.
A guest from Apollo argues that Japan is undergoing generational change in corporate governance, retirement behavior, and policy, and that inflation around 3% is forcing savings out of JGBs and into more productive uses. Another guest says the market reform push that began under Abe has broadened under later prime ministers and is now showing up in record buybacks, higher payouts, and pressure on firms trading below book value. The exchange chief says the hardest task is changing management mindsets, not just financial metrics.
The discussion also stresses what could sustain the comeback: labor shortages, aging, and the need for automation, digitization, and foreign, female, and older workers. A Brookings analyst argues Japan has changed more than the “lost decades” label suggests, but notes the rebound still depends on structural reform, productivity gains, and whether reflation lasts.
Key takeaways
- The host says Japan’s 30-year stagnation narrative is being challenged by inflation, higher rates, and a renewed push to deploy idle savings productively.
- A guest from Apollo argues that around 3% inflation is the key shift that makes cash and JGB hoarding less attractive.
- The exchange chief says the most important reform is changing company management mindsets, not just pushing price-to-book ratios or board changes.
- A Brookings analyst says Japan’s corporate governance and women’s labor participation reforms were meaningful and the “lost decades” label is too simplistic.
- The host highlights record buybacks and payouts as evidence that market pressure on Japanese firms is starting to work.
Notable quotes
“All of a sudden you have closer to 3% inflation. You have interest rates up for the first time and that savings is going to be deployed productively”
“The thing that got things going again for Japan was, ironically, adversity”
“I think, you know, since the Prime Minister Abe supported our governance reform back in 2015, I think all the successors of Mr. Abe, Mr”
How the episode opens
We start with the story of a chopper crew. That's a Japanese term, meaning falling behind. In 1980, Japanese industry was the envy of the world in a variety of sectors, such as automotive, electronics and steel.
As a result, asset values went up, particularly here in Tokyo, where real estate values went sky high, supported by patient capital that did not demand a lot of returns. The 1990s, though, saw that asset bubble burst and when the Japanese government and Japanese banks did not step in aggressively, they took what was a lost decade and turned it into a lost three decades. Most people's expectation of Japan or business mindset of Japan is 30 years of stagnation.
I think, you know, the we call the lost ages during decades and we do not have substantial growth in Japan. Japan faced the deflation for a very, very long time. Japan has been suffering from deflation for more than two decades.
In the late eighties, Japan's economy grew by as much as 6.7% a year, only to have that growth plummet for most of the next 30 years, hovering between zero and 2% and contracting during the great financial crisis and the COVID pandemic, relegating what had been the third largest economy in the world to number four. As Germany surged past, the Nikkei stock market went 34 years without setting new highs. Japanese government bond yields turned negative and stayed there for years.
But all that could now be changing as Japan emerges from those lost decades. What a lovely day in Tokyo. Mark Rowan is CEO of Apollo Global Management.
This is a savings culture and holding on to your cash or leaving your money into JGBs for the past 30 years has been fine because there's been no inflation.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- japan comeback
- lost decades
- inflation return
- corporate governance reforms
- negative interest rates
Companies and tickers mentioned
- APO
- Apollo Global Management
- Japan Exchange Group
- Brookings Institution
Watch the episode
Watch “Japan’s Comeback: Why the “Lost Decades” May Finally Be Ending” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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