(Bloomberg) — Japan has become an attractive destination for global investors as its monetary policy shift and corporate governance reforms create opportunities, BlackRock Inc.’s head of Asia-Pacific Susan Chan said.

“The market has turned and it’s gathering great momentum,” Chan said in the pilot episode of Tiger Money, a podcast from Bloomberg Intelligence. “We’re seeing basically the end to decades of deflation and economic stagnation.”

Read more: BlackRock Warns Weak Yen Deters Foreigners From Japan Stocks

The normalization of interest rates and emergence of inflation will help to push local residents to shift away from cash into investments such as exchange-traded funds, Chan said. Japanese households have more than half of their ¥2,141 trillion ($13.7 trillion) of financial assets sitting in bank deposits.

The world’s largest money manager has identified Japan as a major opportunity in Asia — alongside with ETFs and private markets — as it seeks to meet the changing needs of clients rethinking their portfolios, according to Chan. The Bank of Japan scrapped the world’s last negative-rate policy in March, and Japanese stocks eclipsed a 34-year-old record high earlier this year.

While aging has created challenges for Japan, the country’s focus on automation, robotics and semiconductors makes it “well positioned” to benefit as more nations face the same issue, Chan said.

“All those themes are becoming incredibly relevant globally,” she said. “So it makes them an amazing, amazing economy to look at participating in.”

Chan said BlackRock continues to grow in China with its two onshore businesses there. That’s even as the local market has underperformed for the past 18 months amid challenges including a downturn in the property market, and as geopolitical tensions still “cast a shadow” on its prospects, she said.

The Chinese government has been making positive policy changes, and global investors need to lower expectations for the economy’s expansion, Chan said.

“Even at 5% growth, China will continue to grow and grow out of its problems,” she added. “It’ll just take a little bit longer.”

–With assistance from Rebecca Sin and David Ingles.

©2024 Bloomberg L.P.

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