The new Japanese economy, in a world distancing itself from the United States, with shifting investment directions.

this time "Japan and Thailand" The global spotlight is now on these upcoming elections on February 8, 2026, and the results have generated strong positive sentiment in two major Asian stock markets. Markets are confident that the leaders will bring about significant structural economic changes, particularly in Japan, the world's third-largest economy. Under the leadership of Japan's first female Prime Minister, the focus is on rekindling economic growth amidst high inflation, after recently emerging from a 30-year period of deflation and zero interest rates.

Amid the ticking time bomb of a global structural financial turning point, the Bank of Japan (BOJ) is pursuing a rising interest rate policy to curb inflation, contrasting with a global trend of falling interest rates led by the United States. Japan is withdrawing capital, signaling to the world that money will shrink and create volatility in various assets. Where will this capital outflow from the US go? What are the investment opportunities and risks in Japan? Most importantly, how can we strategically structure our portfolios to navigate this high level of volatility?

After the election, 'Thai stocks were bullish, but Japan's were even more so.'
Let me talk about Thailand first. We Thais, especially investors, are very pleased that the 2026 general election has passed. The market's concerns about Thai politics have eased, and the picture of government formation is becoming clearer. At least now we can see the shadow of a government with the Bhumjaithai Party and Anutin Charnvirakul continuing as Prime Minister for another four-year term. This helps reduce short-term political uncertainty and restores confidence in the Thai stock market.

I believe many people are starting to exit the Thai stock market after the SET Index surged past 1400 points, gaining over 40 points or 3.4% in a single day (February 9th), with trading volume exceeding 100 billion baht – a first in many years. As of today (February 11th), the index remains above 1400 points, amidst renewed foreign buying after years of neglect. The Thai stock market responded strongly positively after three years of negative performance, reflecting expectations that the new government, "Anutin 2," and the same economic team will continue with their policies. These include addressing domestic economic problems, particularly reducing household debt, stimulating investment, creating jobs in the industrial and digital sectors, public transportation, and developing new skills for the workforce to enhance regional competitiveness.

Today, Thai stocks haven't risen due to strong economic fundamentals. It simply reflects expectations that this government will implement structural reforms to restore Thailand's potential and return to a 4% growth rate. This would mean that listed companies would experience investment and profit growth in line with the new economic climate.

This is a major and difficult challenge for the Thai economy, which will determine the future of the Thai stock market: whether it will continue to attract foreign investment or merely engage in speculation. Will the Thai stock market continue its upward trend or will it experience a period of weakness? It all depends on the short-term, medium-term, and long-term policy statements of the new government. This is a short-term risk that everyone must monitor closely.

Japan is another market that investors have been closely watching over the past year, and Warren Buffett invested in Japanese stocks two to three years before the stock market even started to rise.

Earlier this year, the Japanese stock market surged even more than the Thai stock market after the election results showed Sanae Takaichi's Liberal Democratic Party (LDP) winning overwhelmingly. Takaichi retained his position as Prime Minister, similar to Thailand's situation, reinforcing Japan's image of political stability and further boosting global investor confidence, leading to an influx of investment.

The Nikkei 225 index surged past 57,000 points (February 9th) for the first time in history, jumping 4.4% to an all-time high. The Topix also gained +2.3%. The main drive came from two or three sectors that best reflect the "national direction": semiconductors and security-related sectors such as arms manufacturing—a theme that the market is paying more attention to in a world with increased geopolitical risk—and banks, which will benefit from rising interest rates.

With political stability restored, markets regained risk acumen. The yen strengthened by 0.2% to 156.85 yen per dollar, moving away from the "danger zone" that had previously caused market concerns about government intervention following the yen's sharp depreciation.

The movement in the Japanese government bond (JGB) market this time was not as sharp a decline as in the previous month. Bond prices fell only slightly, while bond yields, especially long-term yields, did not rise sharply. This signals that the market is not yet panicking about a potential surge in government debt resulting from the Bank of Japan's (BOJ) continued interest rate hikes to return to normalcy this year. Currently, the policy interest rate is at 0.75%.

Following the election, Japanese bond yields rose due to some selling pressure, particularly on short- to medium-term bonds, reflecting concerns about public debt and fiscal policy. The 10-year bond yield stood at 2.24%, higher than the previous year, and is expected to move upward in line with economic conditions. Rising yields indicate increased risk or uncertainty, and investors may face losses from falling prices.

In January, the Japanese bond market experienced significant volatility due to concerns that interest rate hikes would impact the country's already massive debt burden, which is twice the GDP, and that government spending policies to stimulate the economy would further increase the risk of the nation's debt repayment.

However, Prime Minister Takaichi, the Iron Lady, has clearly stated her commitment to "fiscal discipline," prioritizing fiscal sustainability. The market interprets this as the government "may spend actively," but will not let everything go beyond established limits. The Iron Lady's policies focus on pushing forward government spending, investment to support the economy, and stimulating growth in the next phase. She also emphasizes strengthening national security by preparing to fully rebuild the military and investing in advanced technology in cooperation with the long-standing ally, the United States.

The market is betting that this government will proceed with "heavy investment" and seriously boost the economy, which is a positive factor for the stock market in the medium to long term and helps pave the way for further stock gains.

However, for the Japanese bond market, a Bank of Japan (BOJ) interest rate hike represents increased risk. Furthermore, there are reports that Takaichi may ask the BOJ to delay further rate increases in order to revive the economy and allow for higher inflation. The market remains uncertain about the risk of increased public debt in Japan in the future, making JGBs a risk that investors are closely monitoring.

The US time bomb: When the world's era of cheap currency from the Yen Carry Trade ends.
Although Japan currently has "the situation under control" in its domestic financial markets, the world still faces a major issue that could explode again if the Bank of Japan (BOJ) proceeds with raising interest rates to control inflation this year. The market expects a rate hike of around 1%.

The impact on global financial markets is a decrease in global liquidity. This is because investors who borrowed yen to invest abroad (Yen Carry Trade) at 0% interest will face increased interest costs, impacting investment returns that may not be worthwhile. This led to unwinding positions by selling off US stocks at the beginning of the year, particularly technology stocks that have experienced multiple waves of volatility.

In the 30 years prior to Japan's "Lost Decaded Decade," a prolonged period of economic stagnation and deflation forced the Bank of Japan (BOJ) to implement a zero-interest rate policy, even negative rates at times, in an attempt to stimulate domestic consumption. This was a period of cheap, free money, creating an opportunity for global funds to borrow in a "Yen Carry Trade" and invest in the US market, the world's primary market, because it offered higher returns. Japan is also the largest creditor of the United States, holding the largest amount of US government bonds in the world.

This marks the end of Japan's era of extremely low interest rates, and the end of its status as the world's lowest-cost source of financing.
Currently, global funds engaged in Yen Carry Trade, valued at over 100 billion dollars, are waiting to unwind. This means that global markets are facing another year of high volatility.

Although some analysts estimate that there isn't much surplus liquidity left in global markets after investments were gradually withdrawn over the past 2-3 years since Japan started raising interest rates, suggesting a less severe impact on markets this year, the issue of Japan withdrawing liquidity is once again causing concern. This is because Japan, like the United States, also carries a high level of public debt, increasing the risk to the bond markets of both countries.
Amidst an abnormal world and with countries worldwide distancing themselves from the United States due to weariness with the threatening actions of US President Donald Trump—including geopolitical warfare, trade wars, resource competition, and the uncertainty of the AI ​​market and the potential for a bubble burst—as well as domestic problems such as the massive public debt of $36 trillion and his intervention at the Federal Reserve (FED), Trump recently announced Kevin Warsh as the new FED chair, replacing Jerome Powell whose term expires in May.

The market is concerned about Kevin Warsh's clear stance on monetary policy, opposing multiple rounds of quantitative easing (QE), which could lead to asset bubbles. If the Fed reduces QE or begins QT in the future, the stock market could experience increased volatility at times. This is a major risk the world is watching closely, with a potential correction rather than a further rally after three years of strong gains totaling over 70%.
Developments related to the Federal Reserve (FED) remain the main focus for most investors right now, even though the Fed has signaled that it may cut interest rates again in mid-2569. Goldman Sachs warns that the sell-off in the US stock market is not over yet!

The US stock market surged again, with the Dow Jones index climbing above 50,000 points to set another all-time record. This was driven by a strong US economy, particularly in the technology and AI sectors, which are boosting the growth of large companies.

In today's abnormal world, profit opportunities come hand in hand with volatility.
Everyone is probably wondering why the US stock market is still running to new record highs amidst numerous risks, and why it's moving in the same direction as gold, which is soaring towards a target of $6,000 per ounce.

I can only say that in these abnormal global times, opportunities for profit inevitably come with volatility. Global assets are rising simultaneously. Is this a sign of opportunity or risk?

My answer is that the momentum is driven by continued market sentiment from last year, new inflows from bonuses and portfolio adjustments, and expectations that outweigh fundamentals at times. The market looks good but is "fragile," even though US stocks have risen for the fourth consecutive year and valuations are no longer cheap. However, the key player this time is "earnings," especially for major technology stocks or Big Tech. But stocks whose prices have far exceeded expectations are also prone to high volatility.
I've consistently emphasized since last year that the higher US stocks rise, the greater the risk of a downturn. I've always advised investors who have already made profits to gradually reduce their risk, parking funds in less volatile assets to wait for new investment opportunities.

It's normal for volatility or corrections to occur after years of continuous gains in the US stock market. This, in particular, means more opportunities to buy or accumulate quality stocks. Looking at the long term, even during crises or unexpected events, the stock market continues to grow in line with strong corporate earnings.

Markets may fluctuate periodically, but with the right strategy and a portfolio tailored to individual risk tolerance, there's no need to panic over short-term news. Given that the US remains the world's leading superpower and the driving force behind global economic growth, investors worldwide should continue to balance their portfolios with US bonds and stocks in the long term.

Similarly, with gold, even though it's currently experiencing a strong upward trend reflecting uncertainty in the global financial system, the important thing isn't to predict prices, but to "maintain the proportion" of each asset within the target range. Therefore, if the proportion of gold exceeds the target, it's recommended to "gradually sell." I emphasize again, "you shouldn't chase market sentiment."

I urge everyone to heed Grandpa Buffett's warning, "Don't follow the crowd." Diversify systematically – DCA (Dollar Cost Averaging). Discipline will help you navigate volatility. As the US is no longer as safe as it once was, investors are looking for "alternatives," looking beyond the region. Global funds are shifting direction this year, flowing more towards Asia and emerging markets.

To navigate an abnormal world, your investment strategy should focus on a “survival and growth” portfolio rather than chasing short-term returns or bull markets. A “Core & Satellite” portfolio allocation approach is a good solution for long-term investors.

A simple approach is to diversify the core portfolio (80%) across asset classes and regions to create stability and reduce volatility. For example, investing in bonds and stocks from developed and developing countries like the US, China, Europe, and Japan will help the portfolio maintain stability, generate consistent returns, and minimize downtime during global market volatility.

The secondary (Satellite) portfolio, comprising 20%, is invested to enhance return opportunities from prominent country themes and alternative assets such as gold and Bitcoin. Examples include the potentially promising AI theme and the growing Healthcare Longivity theme driven by continuous innovation. Country-specific investments include Vietnam, a global star with high economic growth and its upgrading stock market to an Emerging Market; China, with its continued growth story but still affordable valuations; the Indian stock market benefiting from the China+1 agreement; and the Thai stock market, believed to have passed its lowest point but awaiting new catalysts, particularly policy clarity from the new government. These are more suitable as a "defender" portfolio rather than seeking volatile returns.

For those who manage a diversified "Core & Satellite" portfolio and rebalance when assets exceed their allocated proportion, it is advisable to gradually sell some assets to take profits and hold cash, or invest in bonds to await a new investment opportunity.

Another strategy to help your portfolio weather volatility is DCA (Dollar Cost Averaging), or consistent investing. This helps reduce volatility in both markets and currencies, especially now that the strengthening Thai baht is impacting foreign investments. However, currencies also have their cycles, so long-term investors don't need to panic about the strong baht in the short term. But for those interested in investing abroad or wanting to increase their investments, I recommend taking advantage of the strong baht as an opportunity to buy good assets at "cheap" prices. Maintaining investment discipline will help your portfolio survive well during times of global volatility.

In summary, this year, safety doesn't come from "avoiding risk," but from systematically diversifying risk on days when there's no definitive answer as to whether the market is frightening or not. The crucial question is: Is your portfolio strong enough? Because in the world of investing, "the real winner isn't the fastest runner, but the one who walks the furthest and steadily." The most important thing is investing in knowledge. This is the answer that will allow you to manage your portfolio responsibly and grow it into a substantial sum of money in the future.