Morgan Stanley’s Asia CEO said Tokyo is catching up with rival financial hubs as Japan’s economy exits decades-long deflation, enhancing financial asset management potential. The Bank of Japan’s policy shift will move household assets from bank deposits to financial instruments, potentially creating a “very large” asset management industry, Gokul Laroia told Bloomberg. Tokyo is catching up to Singapore and Hong Kong, driven by stock market optimism and central bank actions energising the bond market. Hedge funds are hiring yen rates traders from banks, who are also competing for talent. Laroia predicts the yen will strengthen towards 140 against the dollar in the next 18 months, with US rates falling and Japanese rates rising due to entrenched inflation.