Question: Do you think Abe’s third arrow is off track?
Koll: Let me give you an analogy. What sports are Japanese good at? Synchronized swimming. There are a bunch of pretty legs moving around. We don’t know what is going on, but somehow it is pleasant to watch. And women’s marathons; Japanese are good at things where one is in it for the long run. This is the third arrow of structural reform. It is a marathon pace of structural reform versus a sprinter pace.
Question: Are there any of Abe’s growth strategies that people are missing?
Koll: The most tangible benefit is in the health care segment. Take stem cell research. If you are an entrepreneur in stem cell research, you are doing it in Japan. This is not an ethics argument, but you can do anything you want in this area here. On biosciences, research is happening here. The patent cliff for large pharmaceuticals rolled off. The Ministry of Finance wants to cut health care costs, and generic drug penetration, at present, is less than 20%. That will be ramped up.
We want to thank Jesper Koll for his always insightful commentary and note that this is just the start of the conversation with him. For more insights from Mr. Koll and some of the other strategists and economists we spoke with in Japan, please see our full roundtable here.
1Hitachi Corporation Holdings: WisdomTree Japan Hedged Dividend Growth Index – 1.41%; WisdomTree Japan Dividend Index – 1.23%; WisdomTree Japan Hedged Tech, Media and Telecom – 6.47%, as of 9/18/2014.
2Toyota Motor Corp holdings: WisdomTree Japan Hedged Capital Goods Index – 9.54%; WisdomTree Japan Hedged Dividend Growth Index – 4.04%; WisdomTree Japan Dividend Index – 5.19%, as of 9/18/2014.
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