Wall Street Week – "Japan’s New Horizon: Investment Opportunities, Corporate Transformation and the Private Capital Boom"

Host: David Westin (Bloomberg)
Date: February 21, 2026

Overview

This episode of Wall Street Week explores the transformation underway in Japanese capitalism, spotlighting Japan’s emerging investment opportunities, its corporate governance revolution, and the private capital boom. Host David Westin reports from Tokyo, embedding with Apollo Global Management and speaking with leaders from Apollo, Sony, Panasonic Automotive, the Tokyo Stock Exchange, and policy experts. The discussion traces Japan’s journey from economic stagnation to a dynamic period of reform and opportunity, especially as it confronts demographic challenges, inflation, and the need for massive investment in technology and productivity.

Key Discussion Points & Insights

1. Japan’s Long Economic Slumber and Awakening

• Historical Context

  • Japan’s "lost decades" followed the burst of its asset bubble in the 1990s, resulting in stagnation and deflation ([00:57]–[03:05]).
  • Real GDP growth plummeted to near zero, with government bond yields turning negative and the Nikkei index in stasis for over 30 years ([03:05]).

• Shifting Outlook

  • Recent adversity (COVID, supply chain shocks, energy price surges) forced change and generated inflation, ending deflation ([04:54]–[05:09]).
  • Inflation reached nearly 3%, transforming the risk calculus for both households and corporations ([03:46]–[04:54]).

2. Generational and Structural Reform

• Corporate Governance & Policy Reform

  • Prime Minister Abe’s 2015 market reforms and successors’ dedication to corporate governance improvement ([06:05], [08:06]).
  • Rise of “womenomics”: policies to increase female and elderly labor market participation ([06:21]–[12:22]).

• Hiromi Yamaji (Tokyo Stock Exchange):

  • Emphasizes need to “transform the mindset of management”—seen as both the greatest challenge and opportunity ([08:58]).
  • Record-breaking year: Over 5,100 mergers/acquisitions valued at 35 trillion yen ([10:08]).
  • Push for capital efficiency: Over half of listed firms below book value, requiring explanations and improvement ([10:32]).

"To transform the mindset of the management of the companies—that's very important and also probably the most challenging thing." – Hiromi Yamaji, [08:58]

3. Challenges of Demographics and Productivity

• Aging Population

  • Workforce peaked in 1990; aging population now limits labor market expansion ([11:13]).
  • Inclusion of more women, elderly, and foreign workers, but this has a ceiling ([12:22]).

• Investment Needs

  • Demand for long-term capital in manufacturing, energy, AI, and infrastructure is "measured in trillions" ([13:28]–[14:16]).
  • "We are about to spend every dollar since the invention of fire." – Mark Rowan, Apollo ([13:28])

4. The Rise of Private Capital

• Transition from Cash and Banks

  • Japanese households historically allocated >50% of financial assets to cash; now shifting slowly toward equities and alternatives ([16:21]–[16:54]).
  • Demand emerges for products and solutions better suited for retirement and inflation protection ([03:46]).

• Private Credit as ‘Third Way’

  • Traditional Japanese finance: bank loans or equity. Apollo offers private credit as a new alternative to fund complex, long-dated corporate needs ([18:43]–[21:25]).
  • Private credit supplements rather than replaces banks: suitable for large, transformational CAPEX ([20:41]–[21:55]).

"Most of what we're doing is long-dated with long-dated capital. And that is not what the banking system does well." – Mark Rowan, Apollo ([19:00])

• Adoption & Education
  • Resistance is low, but education is key. Many deals are made in partnership with traditional Japanese bankers ([22:51]).
  • Acceptance of private markets is set to accelerate as corporations adapt to new realities.

5. Corporate Transformation in Practice

• Market-Driven Change

  • Management accountability, portfolio realignment, and capital efficiency take center stage ([28:22]).
  • Companies actively reconsidering whether to stay listed, resulting in a spike in delistings and spin-offs ([29:53]).

• Case Study—Panasonic Automotive (Masashi Nagayasu)

  • Positive view of being carved out from Panasonic and working with Apollo: greater focus, agility, and operational discipline ([31:07]–[33:54]).
  • KPI Focus: Key metric is EBITDA minus CAPEX (E–C); target is to triple this value by 2027 ([34:20]).

"Partnering with Apollo we can really 100% commit to automotive sectors field...this is rather positive for us to really stick to that strategy." – Masashi Nagayasu, Panasonic Automotive ([32:21])

• Case Study—Sony Transformation (Hiroki Totoki)
  • Shift from hardware to content: Entertainment increased from 30% to 60% of Sony’s revenue in a decade ([37:14]).
  • Gaming is the largest component; major investments in music catalogs and partnerships with Apollo ([37:51]–[41:00]).
  • The rationale for private capital partnership: Music catalogs are low risk, fit long-term private capital needs ([41:00]).

"The music capital is relatively low risk and low return...that really fit to the, you know, like private credit and you know, need a long time horizon." – Hiroki Totoki, Sony ([41:00])

6. Cultural Shift and Corporate Identity

• Updating Stereotypes

  • The “salaryman” is an outdated stereotype; labor market, especially among new graduates, is more dynamic and fluid ([44:42]–[46:14]).
  • About one-third of new graduates today want to join startups over traditional companies ([46:14]).

• Legacy vs. Innovation

  • Companies value tradition (founders’ philosophy/enduring values) but recognize need for adaptive business models ([47:42], [48:14]).
  • Change management: Both Panasonic and Sony highlight the importance of internal communication to align employees with transformation ([49:31]–[50:39]).

"I have to show the result to the employee to make it everyone the positive way." – Masashi Nagayasu, Panasonic Automotive ([48:26])

• Culture vs. Macroeconomic Forces
  • Japanese conservatism in finance is seen as a rational reaction to economic conditions, not an innate cultural trait ([51:14]–[51:24]).
  • Rising inflation triggers behavioral change toward risk-taking ([52:06]).

"There's nothing like 3% inflation to get people to think differently." – Mark Rowan, Apollo ([52:06])

Notable Quotes & Memorable Moments

• On Generational Change:
  "In many ways they are the first of the western democracies to face real aging retirement and high levels of government debt. And what's happening here is totally different than people's expectation..." – Mark Rowan, Apollo ([03:46])

• On Market Reform:
  "The fundamental challenge is to transform the mindset of the management." – Hiromi Yamaji, Tokyo Stock Exchange ([08:58])

• On Risk Appetite:
  "Corporate Japan has been very risk averse. This might be a way in which begin to see an appetite for, you know, taking on more investment." – Maria Solis, Brookings ([29:25])

• On Private Capital’s Fit:
  "We provide a piece of capital that is in very short supply in Japan, investment grade, long dated, to finance what they need." – Mark Rowan, Apollo ([21:25])

• On Culture vs. Economics:
  "I don't think [cautiousness] is the cultural things. People basically make irrational decisions with the macro environment." – Eiji Ueda, Apollo ([51:24])

Timestamps for Key Segments

| Segment | Timestamp | |--------------------------------------|------------| | Japan’s lost decades: context | [00:57]–[04:54] | | Mark Rowan on inflation’s significance | [03:46] | | Corporate governance transformation | [06:21]–[09:24] | | Hiromi Yamaji on management mindset | [08:58] | | Labor force challenges | [11:13]–[12:32] | | Capital needs for growth | [13:28]–[14:16] | | Shift from cash to equity/alternatives | [16:21]–[16:54] | | Private capital’s role (Rowan, Ueda) | [18:43]–[21:55] | | Case study: Panasonic carve out | [31:07]–[34:14] | | Case study: Sony transformation | [35:06]–[41:23] | | Cultural shift­, changing workforce | [44:42]–[46:14] | | Culture vs. macroeconomics | [51:14]–[52:34] |

Conclusion

Japan is at a pivotal moment, moving beyond the stigma of stagnation into an era characterized by corporate reform, growing investment opportunities, and the integration of private capital. Aging demographics and historically risk-averse practices are now intersecting with policy shifts, inflationary pressures, and a broader appetite for risk and innovation. The stories of companies like Sony and Panasonic Automotive, as well as evolving attitudes towards capital and labor, illustrate a Japan in transformation—one where both ancient culture and modern strategy are rapidly evolving.