CURRENT SITUATION AND FUTURE OF JAPAN– CAN WE MAKE A COMPLETE BREAKFROM THE LOST 30 YEARS? –Mana Nakazora
BNP Paribas Securities （Japan）Limited
Global Markets Japan, Vice Chairperson
Chief Credit Strategist / Chief ESG Strategist
Please contact your BNP Paribas representative with any questions

１. WHAT IS THE BASIC POLICY

2

1.What is the basic policy?
Confirmation of basic matters of the Economic and Fiscal Policy Council
 Article 18 of the Cabinet Office Establishment Act( Act No89 of 1999)is the basic law. The Economic andFiscal Policy Council Ordinance has been based on Article 25.
 A collegial body established within the Cabinet Office for the purpose of fully demonstrating the leadershipof the Prime Minister while utilizing the excellent insight and knowledge of experts on important mattersrelated to economic and fiscal policy.
 It was established in January 2001 due to the reorganization of ministries and agencies under Hashimoto's
administrative reforms. The model is the U.S. Council of Economic Advisers.
 The members are: (1) limited to a total of 11 members, including the chairman (Prime Minister) and 10
members; (2) members other than the Chief Cabinet Secretary and the Minister in charge of Economic andFiscal Policy are not legally designated; and (3) private experts. (4) Other ministers of state may be allowed
to participate in the meeting as a temporary bank with a limited number of proposals.
 Responsible affairs include (1) research and deliberation on important matters related to economic andfiscal policy; (2) research and deliberation on important matters such as national plans stipulated in the
National Spatial Planning Act in response to consultation from the Prime Minister or relevant ministers; (3)Express your opinion regarding these matters.
 70Among the internal departments of the Cabinet Office, the Policy Supervisory Department functions as
the secretariat for general coordination regarding economic and fiscal policy. It is necessary to promote
human resources from inside and outside the administrative organization and to promote cooperation
between the Cabinet Office and the Cabinet Secretariat.
Source：Cabinet Office, BNP Paribas
31.What is the basic policy?
Specific meeting details
List of members of the Economic and Fiscal Policy
Council
ChairmanKISHIDA Fumio

Prime Minister

Member

HAYASHI Yoshimasa

Chief Cabinet Secretary

Member

SHINDO Yoshitaka

Minister of State for Economic and Fiscal Policy

Member

MATSUMOTO Takeaki

Minister for Internal Affairs and Communications

MemberSUZUKI Shunichi

Minister of FinanceMember

SAITO Ken

Minister of Economy, Trade and Industry

MemberUEDA Kazuo

Governor of the Bank of Japan

MemberTOKURA Masakazu

Sumitomo Chemical’s Chairman of the Board

Member

NAKAZORA Mana

BNP Paribas’s Vice Chairperson of Global Markets

MemberNIINAMI Takeshi

Suntory’s CEO

MemberYANAGAWA Noriyuki

Professor at the University of Tokyo

Relationship between macroeconomic management and theEconomic and Fiscal Policy Council

After the Bank of Japan publishes its price outlook (outlook report) etc. (onceevery quarter),It is customary to hold “intensive deliberations on monetary
policy, prices, etc.”
Source：Cabinet Office4

1.What is the basic policy?
Major meetings in the Kishida Cabinet

Meeting※The five councils other than the Economic and Fiscal
Policy Council were established by the Kishida Cabinet.

Main Agenda

Times
held

Constituents（FY2023）

MinisterExperts

Economic and Fiscal Policy Council

Macro economic Fiscal Policy / Basic Policy on Economic
and Fiscal Management and Reform

16

6

4

Council of New Form of Capitalism
Realization

Growth Strategy / Action Plan

10

6

11

Children's Future Strategy Council

Child and Child-Rearing Policy

8

10

19

GX(Green Transformation)
Imprementation Council

GX Promotion（ex. GX Transition Bond, Carbon Pricing）

4

6

12

Meeting on Digital Administrative andFiscal Reform

Digitalization of Education, Nursing care andTrantportation

4

12

5

Headquarters for Social Security
System Oriented to All Generations

Sustainable Social Security

7―（Oct.～）

1

Source：Cabinet Office,BNP Paribas
51.What is the basic policy?
2024 major points arrangement
Chapter Set
Chapter 1: Transition to a new
growth-oriented economic stage
Chapter 2: Achieving sustainableeconomic growth by addressing
social issues - Increasing income
and productivity through fixed
wage increases and strategic
investment Chapter 3: Realizing asustainable economic society inthe medium to long term "Economic and financial
revitalization plan" Chapter 4: Immediate economic andfiscal management and ideas for
FY2020 budget formulation

Important Points
Completely break away from deflation and move the Japanese economy to a new stage. Income that exceeds priceincreases

１．``Increase in income'' and ``fixed wage increases'' that allow you to feel affluence
２．Revitalizing mid-sized and small businesses that support affluence
３．Addressing social issues by expanding investment and implementing innovative technologies in society
４．Addressing social issues by forming startup networks and improving connectivity with overseas countries
５．Regional revitalization and responding to social issues in the region
６．Realizing an inclusive society where people can feel happiness７．Responding to changes in the international environment as the foundation for sustainable economic growth
８．Promotion of disaster prevention/mitigation and national resilience
A six-year medium- to long-term plan until 2030 that aims to overcome the declining birthrate, aging population, and population
decline and realize a sustainable economic society where the people can feel rich and happy. By ensuring real growth that stably
exceeds 1% and achieving the 2% price stability target in a sustainable and stable manner, we aim to have an economy with anominal value of around 1,000 trillion yen around 2040. The five visions are as follows. ① Improving productivity and expanding
growth opportunities by solving social issues as an engine; ② Realizing a society with high levels of well-being in which everyone
can play an active role; ③ Ensuring the sustainability of the economy, finances, and social security; ④ Providing support for eachregion. Formation of sustainable local communities that take advantage of characteristics and growth resources; ⑤Improving
connectivity with overseas growth markets and transforming the energy structure. Then strengthen EBPM

Expand the virtuous cycle of growth and distribution and formulate a budget for FY2020 that firmly maintains fiscal soundness
Source：Cabinet Office,BNP Paribas
61.What is the basic policy?
Despite some criticism that it is too crowded,,, the emphasis is on Japan‘s competitiveness！
Road to economic revitalization (Cabinet Office Minister of State for Special Missions materials)
 If I were to point out one problem with Japan, I
think it would be a lack of competitiveness.
 From that perspective, I think this year's
performance is more robust than in previous
years, and the focus is on competitiveness.
 Japan's current location is positioned as astage where it aims to completely break freefrom deflation, and we encourage productivity
improvements and active investment to moveto the next stage.
 Fiscal consolidation is not austerity. The goal is
to invest funds in the right direction with the
stance that fiscal soundness and wise
spending can coexist.

Source：Cabinet Office,BNP Paribas
7２. JAPAN'S CURRENT LOCATION

8

２．Japan‘s current location
GDP gap are changing from negative to positive. The highest wage increase in 33 years
Real GDP & Potential GDP

Rage wage agreed between firms and unions

570(%) 6.0(trillion yen)

1991

5.10 2024

5.66

560

5.0

550

GDP
gap

540

2023

4.0

potential
GDP

530

3.58

3.0

2022

2.07
2.0

520

510

1.0

500

Source：Cabinet Office, BNP Paribas

2023

2021

0.0
2019

2024

2017

Q4 Q1

2015

2023

2013

Q2

2011

Q4

2009

2022

2007

Q2

2005

Q4

2003

2021

2001

Q2

1999

Q4

1997

2020

1995

Q2

1993

Q4

1991

2019

1989

Q2

Source：Cabinet Office, Japanese Trade Union Confederation, BNP Paribas
9２．Japan‘s current location
The level of value-added productivity in Japan is low compared to overseas developed countries・・・
Relationship between value-added
productivity and real wages( 2019, OECD
countries)

Changes in value-added productivity ( laborproductivity per hour) in major developed countries
（ＵＳＤ）
80

（million dollars）
⽇本
Japan

⽶国
USA

ドイツ
Germany

フランス
France

イタリア
Italy

カナダ
Canada

9

英国
UK
74.2

75
70

8
7

67.6

61.3
60
56.6
55

54.8

︵ USD
︶
Real wages

66.9

65

US

6
Canada5Germany

UK
France

4

Japan
Korea

Italy

40

50
60
70
Value-added productivity

3

50
48.1
45

2

40

1

35

2000

02

04

06

08

10

12

14

16

18

20（year）

Source: Cabinet Office materials

0
20

（ＵＳＤ）
30

80

90

100

Source: Cabinet Office materials

110

10

２．Japan‘s current location
NISA（Japan's new tax exemption scheme for investment by individuals）：Expanding flowfrom savings into investing
Purchase NISA amounts

Number of NISA accounts
30(trillion yen)(thousands)

45
40

25

35
20

30
25

15
20
15

10

10
5

5
0
2014

0
2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2024

(Mar.)(Mar.)

Source： Japan Securities Dealers Association, BNP Paribas
11２．Japan‘s current location
Nikkei average recorded high after 34 years
Long range

Short range

45,000 (JPY k)

45,000 (JPY k)

40,00040,00035,00030,00035,00025,00030,00020,00015,00025,00010,0005,000

20,000Jan‐24Jan‐21

Jan‐18Jan‐15

Jan‐12Jan‐09Jan‐06

Jan‐03Jan‐00Jan‐97Jan‐24

Jan‐94Jan‐23Jan‐91

Jan‐22

Jan‐88Jan‐21

Jan‐850
15,000Jan‐20Source：Bloomberg, BNP Paribas
12２．Japan‘s current location
Yen depreciation & corporate profit increase
Yen Dollar rate

Corporate Profit(trillion yen)

(JPY/USD)

120
170
160

100

150
140

80

130
60

120
110

40

100
90

ordinary profit

20
80

buisiness profit

70

FY2023

FY2020FY2015FY2010FY2005

FY2000Jul-24Jan-20Jan-15Jan-10

Jan-05Jan-000

Source: Bloomberg, Ministry of Finance, BNP Paribas
13

Jan-24Jan-23Jan-22

Jan-21

Jan-20Jan-19Jan-18Jan-17Jan-16

Jan-15Jan-14Jan-13Jan-12

Jan-11

Jan-10

Jan-09

Jan-08Jan-07

Jan-06

Jan-05

0.50
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
Jan-04

RTY/ NDX

Jan-03Aug-23Aug-22Aug-21

Aug-20Aug-19Aug-18Aug-17Aug-16Aug-15Aug-14Aug-13Aug-12

Aug-11

Aug-10Aug-09Aug-08Aug-07Aug-06

Aug-05Aug-04Aug-03Aug-02Aug-01

Aug-00２．Japan‘s current location
Are large companies the only ones driving the stock market?
TSEMOTHER /NKY

0.25

0.20

0.15

0.10

0.05

0.00

Sources: Bloomberg, BNP Paribas
14

３. SHORT-TERM INTENSIVE MEASURES

15

３．Short-term Intensive measures
Japanese corporation’s investment stance is weak, but ,,,Saving-investment balance of non-financial corporations
(%)

Japan
U.S.
Germany
FranceU.K.
Korea

Source： OECD, Cabinet Office, BNP Paribas
16

３．Short-term Intensive measures
External FDI is much larger than internal FDI
FDI

FDI promoting action plan(2023)
External FDI

Internal FDI(trillion yen)
350
300

FDI Target:
46tr(FY2022)⇒ 100 tr(FY2030)

250
200
150
100

Strengthen Strategic item’s supply chainEx) semiconductor, biotechnology

50
0
-50

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

-100

Source：Ministry of finance, BNP Paribas
17

３．Short-term Intensive measures
Japan has many GX-related patents
Are there many technologies which are not being utilized?

GX-related patent score of company in each counties(Patent Score)
Car

Electric Vehicle
Information
Technology

Storage Battery

Architecture

Chemistry

Energy Supply

GHG Reduction
Technology

Hydrogen Fuel

Solar Light

AircraftWind Powerothers

Italy

U.K

Denmark

FranceU.S

Saudi Arabia

Netherland

Germany

Korea

Japan

Source：GPIF, JOIC,BNP Paribas
18

３．Short-term Intensive measures
To achieve both economic growth and fiscal consolidation

Trinity labor market reforms and structural wage increases-Reskilling, Job-based pay, Facilitating labor transfer into growth areas

Expanding investment-GX, DX, Startup, Innovation, InboundSustainable economic and fiscal management
Formulate a medium-term economic and fiscal framework

Can we achieve 1% real GDP growth?
Source: BNP Paribas
19

４. LONG-TERM COUNTERMEASURES

20

４．Long-term countermeasures
Labor shortage is becoming serious problem according to population decrease
Working age population(%)(D.I.)

Employment condition (= sufficient – insufficient)

30
90
20

86

85

10
80
0

75

70

-10

65

Insufficient

10million decrease(2000⇒2020)

75

-20

20million decrease(2020⇒2050)

60

55

55

-30
-40

50
2024

2020

2015

2010

2005

2000

1995

1990

1985

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

2000

1995

1990

1985

1980

-50

Source： OECD, Cabinet Office, BNP Paribas
21

４．Long-term countermeasures
The lost 30 years overlapped with the period of population stagnation. Declining population has a major impact
on economic growth!
Relationship between population growthrate and economic growth rate

Population Change
CY1990=100
Japan

US

UK

Germany

FranceChina

Real GDP growth = 1.85 x Population growth rate + 1.08

Real GDP YoY growth

Coefficient of determination: 0.49
(t-value:4.77)

US
UK
Germany

France
Japan

Italy

Population growth YoY
Note: OECD countries, 30-year average to 2019

Source: Cabinet Office materials

22

４．Long-term countermeasures
Countermeasures have not yet worked…
Changes in the number of births (10,000)
Number of births
5-year backward moving average

Average Wage PPP Base in Each country
7（10000 dollar）

6
5
4
Germany
ドイツ
UK
英国
Japan
日本

3
2
1990

Changes in the number of marriages(10,000)

2000

2010

フランス
Franceスウェーデン
Swedenデンマーク
Denmark

2020

Percentage of housing expenses in consumption
expenditure of two-or –more-person households (2019)

Number of marriages
5-year backward moving average

Yrs
old

Source: Cabinet Office materials

23

４．Long-term countermeasures
To achieve both economic growth and fiscal consolidation

Public debt to GDP ratio

Primary Balance to GDP ratio
Baseline case(about 0.5% real growth)

Growth case(about 1.7% real growth)

Growth case(about 1.7% real growth)Baseline case(about 0.5% real growth)

Source：Cabinet office, BNP Paribas
24４．Long-term countermeasures
Improving Japan's fiscal health and maintaining creditworthiness
List of developed country ratings
MDY
UNITED STATESGERMANYFRANCEITALYSPAIN
BRITAIN
CANADA
JAPAN
CHINA

S&P

Fitch

Rating
AA+u
AAAu
AAu
BBBu
Au
AAu
AAA
A+u

Outlook
STABLESTABLENEG
STABLESTABLESTABLESTABLESTABLE

Rating
AA+u
AAAu
AA-u
BBBu
A-u
AA-u
AA+u
Au

Outlook
STABLESTABLESTABLESTABLESTABLENEG
STABLESTABLE

Rating
AAA
AAA
AAA
BBB+
A
AAA
NR
AA+

Outlook
STABLESTABLESTABLESTABLESTABLESTABLE

Rating
AAA
AAA
AAA
A
AA
AAA
AAA
AAA

Outlook
STABLESTABLESTABLESTABLESTABLESTABLESTABLESTABLEA1

STABLEA+

STABLE

A+u

STABLEAA-

STABLEAA

STABLE

600

Ratio of public debt to GDP(%, fiscal year)
300300（%）

2008.

1927.

500

250250400200200300
200150150100
0Mar-08100100Mar-10Mar-12Mar-14Mar-16

Mar-18

Showa Financial Panic
1904.

1923.

Deposit Financial Institution

Insurance

Pension Fund

Economic downturn
precipitatedby the Lehman
2021.
Brothers bankruptcy
253.4％

1941〜1945.
World War Ⅱ

1931.

RussoGreat Kanto Manchurian
Japanese War earthquake Incident
1914〜1918.
1894. World War IFirst SinoJapanese war

1997.

1991〜 Asian currency crisis
Economic bubble burst
Hyperinflation occurs 、
debt adjustment byembargo 、 new yen switchover 、
property tax 、 war special
compensation tax (etc.)
1979.

Second Oil Crisis
1973.

Mar-20BOJ

Overseas

JCR

Outlook
NEG
STABLESTABLESTABLESTABLESTABLESTABLESTABLE

Breakdown of government bond holders

(兆円)

R&I

Rating
Aaa
Aaau
Aa2u
Baa3u
Baa1
Aa3u
Aaa
A1

The first oil crisis

50 50
0 0

1890 1900 10

20

30

40

50

60

70

80

90 2000 10

20（year）

Source: Bloomberg, MOF,BNP Paribas
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26

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employees or representatives may from time to time act as manager, co-manager or underwriter of a public offering or otherwise, in the capacity of principal or agent, deal in, hold or act as market makers or advisors, brokers or commercial and/or investment bankers in
relation to the securities or related derivatives that are discussed herein. BNP Paribas and its affiliates may (or may in the future) hold a position or act as a market maker in the financial instruments discussed, or act as an advisor, manager, underwriter or lender to such
issuer. In no circumstances shall BNP Paribas or its affiliates be obliged to disclose any information that it has received on a confidential basis or to disclose the existence thereof.
The information presented herein does not comprise a prospectus of securities for the purposes of EU Directive 2003/71/EC (as amended from time to time).
This communication was produced by a BNP Paribas group company. This communication is for the use of intended recipients and may not be reproduced (in whole or in part) or delivered or transmitted to any other person without the prior written consent of BNPParibas. By accepting this communication you agree to this.
UK: In the UK, this document is being communicated by BNPP London Branch. 10 Harewood Avenue, London NW1 6AA; tel: +44 20 7595 2000; fax: +44 20 7595 2555- www.bnpparibas.com. Incorporated in France with Limited Liability. Registered Office: 16 boulevarddes Italiens, 75009 Paris, France. 662 042 449 RCS Paris. BNP Paribas is authorised and regulated by the European Central Bank and the Autorité de contrôle prudentiel et de resolution. Deemed Authorised by the Prudential Regulation Authority and with deemedvariation of permission. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while
seeking full authorisation, are available on the Financial Conduct Authority’s website. BNP Paribas London Branch is registered in the UK under number FC13447. UK establishment number: BR000170. UK establishment office address: 10 Harewood Avenue, London
NW1 6AA.

The information contained in this material have been obtained from sources believed to be reliable by BNP Paribas Securities (Japan) Limited, but no representation or warranty, express or implied, is made that such information is accurate or complete and it should not
be relied upon as such. This material does not constitute a prospectus, nor has it been prepared with the intention to indicate a standard of judgment regarding the value of the securities mentioned in this material. Furthermore, this material is not intended to be arecommendation or solicitation to buy or sell, or carry out any other transaction regarding, any securities. The projections and opinions contained in the material reflect our judgments at the time of the preparation of this material, and are subject to change without notice.
BNP Paribas Securities (Japan) Limited and its affiliates (“collectively “BNP Paribas”) may retain positions on such securities or derivatives thereon; and may trade on the said securities as principal. BNP Paribas, including its officers and employees, may serve or have
served as an officer or director of, or in an advisory capacity for, any issuer mentioned in this material. BNP Paribas may have performed investment banking, underwriting or other services (including acting as adviser, syndication manager, or underwriter etc.) within thelast 12 months for the issuers mentioned in this material. BNP Paribas may, to the extent permitted by law, act upon or use the information contained herein, before its publication. BNP Paribas shall not accept any liabilities whatsoever for any actions taken by the reader
based on the information contained in this material. This material is provided to a limited number of readers, and its reproduction without written permission is prohibited.
(Disclosure subject to Article 37 of Financial Instruments and Exchange Act (FIEA))
Fees, Remunerations and Expenses
The amount of fees, remunerations and expenses is determined based on the type, size, nature etc. of each individual financial instruments transaction. Please contact your sales representative for details.
Margin Deposit and other Cash CollateralIn general, margin deposits and other cash collaterals are required for margin trading and future transactions. However, the amount of deposit or collateral is determined based on the type, size, nature etc. of each individual financial instruments transaction. Pleasecontact your sales representative for details.
Explanation on Important Risk Matters
The following risks may be involved in Financial Instruments which we provide (including listed derivatives and OTC derivatives):
1.
Price Fluctuation Risk (“Risk of principal losses” or “risk of incurring losses exceeding initial principal” in Financial Instruments which are directly caused by fluctuation in interest rates, currency values and other indices)2.
Credit Risk (“Risk of principal losses” or “risk of incurring losses exceeding initial principal” in Financial Instruments which is directly caused by changes in business or asset status of the person who provides Financial Instruments or otherperson(s))
3.
Limit on the period for exercising rights or canceling contracts (Limit on the period for exercising rights in Financial Instruments or limit on the period for canceling contracts related to Financial Instruments.)
・“Risk of principal losses” means the risk that the total amount of money, etc. which you paid initially for a purchase or other transaction on Financial Instruments may exceed that which you will receive when you sell the Financial Instruments or otherwise close out thetransaction.
・ “Risk of incurring losses exceeding initial principal” means the risk that the amount of incurring losses caused by price fluctuation risk and credit risk may exceed the cash collateral including a margin deposit to be paid.
BNP Paribas Securities (Japan) Ltd. Registered Financial Instruments Exchange Firm (registration No. 2521), A member of Japan Securities Dealers Association, Financial Futures Association of Japan and Type II Financial Instruments Firms Association.

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Disclaimer
General Disclaimers
Legal Notice: This document/communication may contain “Research” as defined under MiFID II unbundling rules; any such Research is intended either (i) for those firms who are in scope of the MiFID II unbundling rules and have signed up to a BNP Paribas Global Markets Research package, or (ii) for firmsthat are out of scope of the MiFID II unbundling rules and therefore are not required to pay for Research under MiFID II. Please note that it is your firm’s responsibility to ensure that you do not view or use any Research in this document if your firm has not signed up to a BNP Paribas Global Markets
Research package, unless your firm is out of scope of the MiFID II unbundling rules. This document may also be regarded as a minor non-monetary benefit (MNMB) and it is your firm’s responsibility to consider its own regulatory obligations in relation to inducements and accepting MNMBs.

This document is CONFIDENTIAL AND FOR DISCUSSION PURPOSES ONLY; it constitutes a marketing communication and has been prepared by a Sales and Marketing function within BNP Paribas and/or its subsidiaries or affiliates (collectively “we” or “BNP Paribas”). As a confidential document it is submitted to selected
recipients only and it may not be made available (in whole or in part) to any other person without BNP Paribas’ written consent.
This document is not a recommendation to engage in any action, does not constitute or form any part of any offer to sell or issue and is not a solicitation of any offer to purchase any financial instrument, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract orinvestment decision. To the extent that any transaction is subsequently entered into between the recipient and BNP Paribas, such transaction will be entered into upon such terms as may be agreed by the parties in the relevant documentation.
The information contained in this document has been obtained from sources believed to be reliable, but there is no guarantee of the accuracy, completeness or suitability for any particular purpose of such information or that such information has been independently verified by BNP Paribas or by any person. None of BNPParibas, its members, directors, officers, agents or employees accepts any responsibility or liability whatsoever or makes any representation or warranty, express or implied, as to the accuracy or completeness of the information, or any opinions based thereon, contained in this document and it should not be used in place ofprofessional advice. Additional information may be provided on request, at our discretion. Any scenarios, assumptions, historical or simulated performances, indicative prices or examples of potential transactions or returns are included for illustrative purposes only. Past performance is not indicative of future results. Investors
may get back less than they invested. BNP Paribas gives no assurance that any favourable scenarios described are likely to happen, that it is possible to trade on the terms described herein or that any potential returns illustrated can be achieved. This document is current as at the date of its production and BNP Paribas isunder no obligation to update or keep current the information herein. In providing this document, BNP Paribas offers no investment, financial, legal, tax or any other type of advice to, and has no fiduciary duty towards, recipients. Certain strategies and/or potential transactions discussed in this document may involve the use ofderivatives which may be complex in nature and may give rise to substantial risks, including the risk of total or partial loss of any investment or losses without limitation and which should only be undertaken by those with the requisite knowledge and experience. BNP Paribas makes no representation and gives no warranty as to
the results to be obtained from any investment, strategy or transaction, or as to whether any strategy, security or transaction described herein may be suitable for recipients’ financial needs, circumstances or requirements. Recipients must make their own assessment of strategies, securities and/or potential transactions detailed
herein, using such professional advisors as they deem appropriate. BNP Paribas accepts no liability for any direct or consequential losses arising from any action taken in connection with or reliance on the information contained in this document even where advised of the possibility of such losses.
As an investment bank with a wide range of activities BNP Paribas may face conflicts of interest and you should be aware that BNP Paribas and/or any of its affiliates may be long or short, for their own account or as agent, in investments, transactions or strategies referred to in this document or related products before thematerial is published to clients and that it may engage in transactions in a manner inconsistent with the views expressed in this document, either for their own account or for the account of their clients. Additionally, BNP Paribas may have acted as an investment banker or may have provided significant advice orinvestment services to companies or in relation to investments mentioned in this document. The information in this document is not intended for distribution to, or use by, any person or entity in any jurisdiction where (a) the distribution or use of such information would be contrary to law or regulations, or (b) BNP
Paribas or a BNP Paribas affiliate would become subject to new or additional legal or regulatory requirements. Persons in possession of this document should inform themselves about possible legal restrictions and observe them accordingly.
This document is intended for, and is directed at, (a) Professional Clients and Eligible Counterparties as defined by the European Union Markets in Financial Instruments Directive (“MiFID”), and (b) where relevant, persons who have professional experience in mattersrelating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, and at other persons to whom it may lawfully be communicated (together “Relevant Persons”). Any investment or investment activity towhich this document relates is available only to and will be engaged in only with Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or its content. Any reference to EU legislation or requirements herein should be read as areference to the relevant EU legislation or requirement and/or its UK equivalent legislation or requirement, as appropriate, where applicable, and as the context requires.
This document is being communicated by BNP Paribas London Branch. BNP Paribas is incorporated in France with Limited Liability. Registered Office: 16 boulevard des Italiens,75009 Paris, France. 662 042 449 RCS Paris. BNP Paribas is authorised and regulated by
the European Central Bank and the Autorité de contrôle prudentiel et de résolution. BNP Paribas is authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation
Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. BNP Paribas London Branch is registered in England and Wales under number FC13447. UK establishment number: BR000170. UK
establishment office address: 10 Harewood Avenue, London NW1 6AA; tel: +44 (0)20 7595 2000; fax: +44 (0)20 7595 2555 (www.bnpparibas.com).
© BNP Paribas. All rights reserved.

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Disclaimer(Explanatory note on non-registered credit rating)From the viewpoint of ensuring fairness and transparency in the markets, the Financial Instruments and Exchange Law has introduced a registration system for credit rating agencies. In accordance with this regulation, financial instruments firms are required to informcustomers of the fact that the rating is not registered and the rationale for the registration system, etc. whenever marketing any financial products which are rated by non-registered credit rating agencies.
Rationale for the Registration System
Registered credit rating agencies are subject to regulations such as: (1) the duty of good faith; (2) the duty to maintain an operational management system which prevents conflicts of interest and ensures the fairness of the credit rating process, etc.; (3) the prohibition on
giving a credit rating to a security which they hold; and (4) the duty to disclose information including to prepare and make available for public inspection the policies for credit ratings and the documents for public release and explanation. Registered credit rating agencies
are also subject to supervision by the Financial Services Agency, including orders to submit information, onsite inspections and business improvement orders. However, non-registered credit rating agencies are not subject to such regulation or supervision.
Name of the Credit Rating Agency Group, etc.
Name of the Credit Rating Agency Group: S&P Global Ratings (“S&P”)
Name of the Registered Credit Rating Agency within the Group and its Registration Number:
S&P Global Ratings Japan K.K. (FSA Commissioner (Rating) No. 5)
Name of the Credit Rating Agency Group: Moody’s Investors Service (“Moody’s”)
Name of the Registered Credit Rating Agency within the Group and its Registration Number:
Moody’s Japan K.K. (FSA Commissioner (Rating) No. 2)
Name of the Credit Rating Agency Group: Fitch Ratings (“Fitch”)
Name of the Registered Credit Rating Agency within the Group and its Registration Number:
Fitch Ratings Japan Limited (FSA Commissioner (Rating) No. 7)
Method of Obtaining the Information about the Summaries of the Policies and Criteria for Credit Rating
S&P:
The information is published in the “Non-Registered Rating Information” (「無登録格付け情報」http://www.spglobal.co.jp/unregistered ) which can be found in the menu under “Library/Regulation Related” (「ライブラリ・規制関連」) on the website of S&P Global
Ratings Japan K.K. (http://www.spglobal.co.jp/ratings).
Moody’s:
The information is published in the section “Matters Related to the Explanation of Non-Registered Ratings” (「無登録格付説明関連」) in the page which is displayed after clicking “Disclosures” (「開示」) under the tab “Regulatory Affairs” (「規制関連」) on the website of
Moody’s Japan K.K. (https://ratings.moodys.com/japan/ratings-news).
Fitch:The information is published in the “Overview of Policies etc. for Credit Rating” (「格付方針等の概要」) in the “Regulation Related” (「規制関連」) section on the website of Fitch Ratings Japan Limited (http://www.fitchratings.co.jp/web/).
Assumptions, Significance and Limitations of the Rating
S&P:
Credit ratings assigned by S&P Global Ratings (“S&P”) are opinions of the future credit quality of specific issuers or issues as of the date they are expressed, and it is not an index which shows the probability of the occurrence of the failure to pay by the issuers or aparticular debt, and do not guarantee the credit worthiness. Credit ratings are not a recommendation to purchase, sell or hold any securities, or a statement of market liquidity or prices in the secondary market of any issues.
Credit ratings may change depending on various factors, including issuers' performance, changes in external environment, performance of underlying assets, creditworthiness of counterparties and others. S&P conducts rating analysis based on information it believes tobe provided by the reliable source in terms of quality and quantity. However, S&P does not perform an audit, due diligence or independent verification of any information it receives from the issuers or a third party, or guarantees its accuracy, completeness or timeliness of
the results gained from the information. Moreover it needs to be noted that it may incur a potential risk due to limitation of the historical data that are available for use depending on the rating.
Moody’s:
Credit ratings are Moody’s Investors Service's ("MIS") current opinions of the relative future credit risk of entities, credit commitments, or debt or debt-like securities. MIS defines credit risk as the risk that an entity may not meet its contractual, financial obligations as theycome due and any estimated financial loss in the event of default. Credit ratings do not address any other risk, including but not limited to: liquidity risk, market value risk, or price volatility. Credit ratings do not constitute investment or financial advice, and credit ratings are
not recommendations to purchase, sell, or hold particular securities. No warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such rating or other opinion or information is given or made by
MIS in any form or manner whatsoever.
Based on the information received from issuers or from public sources, the credit risks of the issuers or obligations are assessed. MIS adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MIS
considers to be reliable. However, MIS is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Fitch:
Ratings assigned by Fitch are opinions based on established criteria and methodologies. Ratings are not facts, and therefore cannot be described as being "accurate" or "inaccurate". Credit ratings do not directly address any risk other than credit risk. Credit ratings do
not comment on the adequacy of market price or market liquidity for rated instruments. Ratings are relative measures of risk; as a result, the assignment of ratings in the same category to entities and obligations may not fully reflect small differences in the degrees of risk.
Credit ratings, as opinions on relative ranking of vulnerability to default, do not imply or convey a specific statistical probability of default.
In issuing and maintaining its ratings, Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with
its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The assignment of a rating to any issuer or any security should not be viewed
as a guarantee of the accuracy, completeness, or timeliness of the information relied on in connection with the rating or the results obtained from the use of such information. If any such information should turn out to contain misrepresentations or to be otherwise
misleading, the rating associated with that information may not be appropriate. Despite any verification of current facts, ratings can be affected by future events or conditions that were not anticipated at the time a rating was issued or affirmed. The detailed explanation forassumptions, significance and limitations of the rating is available under 「格付け及びその他の形態の意見に関する定義」on the Japanese Website of Fitch.
This information is prepared based on sources which we believe are reliable, but we do not guarantee its accuracy or completeness. For details, please refer to the above mentioned website of each agency.

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