Despite experiencing similar economic conditions to Japanese markets in recent times, Western markets are more likely to take extreme action to return to normal than follow Japan’s conservative approach, according to Man FRM.
In a statement released to investors, Man FRM noted current market conditions resemble conditions that Japanese asset managers have faced since the 1990s.
Even so, Man FRM argues that it is not obvious what can be learned from this experience, cautioning that when looking at the root causes of macro-economic headwinds, “it is the contrast with Japan, not the similarity which is striking”.
“The recent headlines dominating the press seem to endorse the view that the West is simply incapable of repeating the Japanese experience,” the company said.
Man FRM used the result of the Brexit referendum as an example, since “early signs that the Europeans are pulling together rather than apart” would suggest a “fortress mentality”, but recent terror attacks in France suggest a “racially fractured and weakened society”, something not evident in Japan.
Additionally, the push toward populism in the US election is “really striking”, the company said, given that economic conditions are “much better” at a national level in the US than they have been in Japan for a number of years.
“The political message appears to be that Western populations will be prepared to take some potentially radical and counter-productive steps quite quickly rather than submit to a Japanese-style torpor,” Man FRM said.