Sometimes, when Japanese academics select the single written character that best captures the essence of the year gone by, there are surprises. In 2020, there could only be one choice: mitsu, meaning “close”, “intimate” or “dense”.
The selection attests to a word whose usage has been recast by Covid-19. Nearly a year into the pandemic, the process of that recasting has been vital. It places Japan in a group with Taiwan, South Korea, Vietnam and China, as theories form about the societal factors that might have contributed to keeping their infection and death rates comparatively low.
Early in the crisis, as governments strained to find public health strategies that had the magic combination of being coherent and achievable, Tokyo began urging people to fear and avoid three mitsu — close-contact settings, tightly packed crowds and confined environments.
The slogan proved linguistically and socially potent. A word that had previously conveyed a warm and intimate sense of closeness suddenly implied something claustrophobic and abhorrent. While public health messaging by other nations was often ruinously contorted, mitsu was a triumph. It simply classified the biggest risks and then guessed (for the most part correctly) that a society already disposed to generating and self-policing new rules would do just that.
Investors, suggest analysts at Nomura Securities in an unusual report entitled “Discipline delivers”, should view the success as a reason for a wholesale reassessment of regional risk.
The report attempts to frame Japan’s response to the pandemic (along with those of other Asian countries where deaths per million have been low) with a distinction between “tight” and “loose” cultures of individualism versus collectivism. To do this, joint head of Asia Pacific equity research, Jim McCafferty, and his colleagues drew on a striking breadth of sociological, anthropological and psychological scholarship.
Conservative attitudes in Asian societies, the report concludes, “are mirrored in the behaviours of listed companies and governments”. As end-of-year equity research reports go, this is a courageous way to punt stocks.
The report starts with the premise that Covid-19 management strategies in Asia have generally had a better record of success than in other parts of the world, notably the US and UK. For a start, it looks at the background to Taiwan’s effective containment of the virus without resorting to a national lockdown.
In 2003, when Taiwan was hit by the Sars outbreak, complacency and dismissal of guidelines led to panic and hoarding. In the wake of that, argues Ming-Cheng Lo at the University of California, the crisis was “societalised”. The problem was reinterpreted as a societal crisis. When Covid-19 arrived, there was still a strong national memory that these threats had to be dealt with as a society. A similar phenomenon followed South Korea’s experience with Mers in 2015.
One of the most important metrics to explain cultural differences in social behaviour is the variation in the balance between individualism and collectivism. Japan, Hong Kong, China and South Korea sit at the collective end of the scale, whereas most western nations are further towards the individualistic end. Collectivist societies — where unwritten rules often carry significant weight — are thought to be more conformist and therefore better at solving problems like a pandemic.
A high degree of conformity, the report notes, is the main reason why Asian societies behave in a more orderly way than those in the west: individuals cede greater importance to the group and the clan has a strong power of regulation of people’s behaviour.
A final observation highlights the theory of cultural “tightness” and “looseness” that reflects the power of social norms — such as the wearing of masks or the avoidance of mitsu — and how societies go about sanctioning them. A 33-nation survey conducted by psychologist Michele Gelfand produced national “tightness scores” based on how appropriate participants in a given country felt certain behaviours (laughing, kissing, arguing and so on) were in different contexts (in libraries, at funerals, on buses). China, Singapore, South Korea and Japan score highly.
Nomura’s report brings all this, screechingly but plausibly, back to equities. The Asian response to the pandemic should pose much tougher questions about whether the country risk premiums currently applied by global fund managers (which give a higher score to China and Japan than to the UK and France) are still valid, says Mr McCafferty. If a word like mitsu can change its meaning overnight, what else might be due a re-rating?