BOJ's next challenge will be to pull back from stocks and bonds

TOKYO -- Japan's economy seems to have "turned a corner," and its stock market remains inexpensive versus most of its peers,CEO Larry Fink of BlackRock, the world's largest asset manager, saidThursday.

With Japan's currency having weakened to around 150 yen against the dollar, "on a dollar basis, Japanese stocks are very cheap," Fink told Nikkei and TV Tokyo here.

"If you look at the quality of some of the Japanese companies and their earnings, they have more upside," Fink also said.

"We are overweight in Japan, and our investors like the overweight," he said.

Fink's comments came on a day the Nikkei Stock Average rose 2% to a record-high close,during a week that has seen the biggest change in Japanese monetary policy in nearly 20 years.

He emphasized a shift in the economic mood toward "hope" with the end of decades of stagnation that followed the bursting of Japan's economic bubble.

Fink said the "broader participation of individual investors" in Japan in the domestic market represents "a sign of hope."

In particular, he called the revamped Nippon Individual Savings Account tax-free investment program rolled out by the government this year "so important for Japan."

The hope is that the program will encourage households to move money out of cash and deposits in favor of investment.

"I'm excited about how the new NISA accounts can help reinvigorate, help stimulate the Japanese economy," he said.

Fink welcomed the Bank of Japan's decision Tuesday to end its negative interest rate policy, raising rates for the first time in 17 years.

"I would like the Japanese central bank to move more quickly," he said."I think the faster we can change the old regime to a new regime is a statement to all Japanese --that the impression that negative interest rates have caused is over and that the opportunity to earn money again on money is real."

"Having higher interest rates on your savings will stimulate more consumption, and that's what Japan needs," he also said.

Fink said the U.S. Federal Reserve, which indicated Wednesday it expects to makethree interest rate cuts this year, "has acted appropriately."

"We think the first cut is in June," he said.

Fink strongly objected to the idea that the Novemberpresidential election could affect the Fed's decision-making, stressing that the central bank is "nonpolitical." Fed Chair Jerome Powell's decisions "will be very data-dependent," he said.

The BlackRock chief sees U.S. equities, like their Japanese counterparts, having more upside potential even at their current record levels. Asked about concerns that the market is skewed toward companies involved in artificial intelligence, Fink pointed to heavy investment in research and development by American companies in other fields as well.

"It's the innovation of companies that is transforming so many businesses, whether it's energy or the new technologies for pharmaceuticals," he said.

"I believe the U.S. equity market is winning because of the innovation."

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