A powerful signal just came from Tokyo: Apollo CEO Marc Rowan declared that Japan has a 'new swagger,' marking a definitive end to its 'lost decades.'
This isn't just optimistic talk; it's a recognition of fundamental changes. For the first time in a generation, Japan is experiencing sustainable inflation of around 3%, positive interest rates, and deep corporate reforms, all of which are fueling a genuine investment cycle. This transforms Japan from a market focused on avoiding deflation to one geared for growth.
This shift didn't happen overnight. It's the result of three powerful, interlocking forces. First, the Bank of Japan has decisively shifted its monetary policy. After ending its era of negative interest rates in early 2024, it has continued to normalize policy with rate hikes, like the one in December 2025. This move is critical because it allows for the proper pricing of risk and return, reviving the country's credit markets.
Second, a new political landscape has emerged. Prime Minister Sanae Takaichi's landslide election victory in February 2026 granted her government a two-thirds supermajority. This provides a strong mandate to implement pro-growth fiscal and structural policies, including industrial and security measures that encourage companies to make long-term investments.
Third, a quiet revolution is unfolding in Japan's boardrooms. The Tokyo Stock Exchange's campaign for 'cost-of-capital-aware management' is compelling companies to improve shareholder returns. This, combined with record levels of shareholder activism, is forcing businesses to become more efficient, sell non-core assets, and improve their balance sheets.
These factors create a virtuous cycle. The policy changes, political stability, and corporate reforms reinforce one another, and the market is taking notice, with the Nikkei index repeatedly hitting all-time highs. This is why the opportunity in private credit—where firms like Apollo provide direct loans to companies—is so compelling. As Japanese companies restructure and seek new forms of capital, a massive new market is opening up.
- Glossary -
- Private Credit: Direct lending to companies by non-bank investment firms. It serves as an alternative to traditional bank loans or public bonds.
- Corporate Governance: The system of rules, practices, and processes by which a company is directed and controlled. Good governance aims to balance the interests of a company's many stakeholders.
- Shuntō: The Japanese word for the annual spring wage negotiations between labor unions and employers, which have a significant impact on wage growth and inflation.