Welcome to Thoughts on the market. I'm Jonathan Garner, Chief Asia and

Emerging Markets Equity Strategist at Morgan Stanley.

Along with my colleagues in the US and Europe, bringing you their variety of

perspectives, I'll be providing input on this large, growing and increasingly complex part of the global economy.

It's Tuesday, January 14th in Hong Kong at 9 a.m.

I've been based with the firm here in Hong Kong for the last

10 years but for my first episode I want to focus on Japan a market we're known for

being structurally bullish on in investment it's often trends which are building up under

the radar which are more important and that is what is happening in Japan equities.

In fact we are calling it the most underappreciated turnaround story in global equities.

Over the last seven years, since the launch of Abenomics under Japanese Premier Abesan,

Japan equities have already outperformed the broad emerging markets index,

which I also cover, by over 50% in US dollar terms.

In fact, over that period, their risk-adjusted returns,

so that's returns adjusted for volatility are second only to the US and

significantly better than Europe and almost all emerging equity markets.

Now why is this happening?

Surely Japan has weak demographics, growth and corporate governance.

Hardly sounds like a good investment story.

But this pessimistic consensus, we think, is looking in the rearview mirror

and misses important signs of improvement in Japan's macro and micro performance

in recent years.

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