The fund manager of our Japanese equity fund Taiko Japan, Rupert Kimber, recently came back from a trip to Japan. Here are his notes.Read more
Corporate Japan embraces inflation amid economic shifts and strategic changes
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Five questions to a portfolio manager – Rupert Kimber
1. The market has performed well for the past 3 years. Given that there have been many false starts for Japan over the last 30 years, what makes this time different?
Corporate governance/changes in the corporate landscape/ shareholder activism are three factors, now well established, that should contribute to a fundamental change in market dynamics.
How has the Japanese market become attractive again?
The Japanese market has outperformed the global market in local currency terms over the past 2 years (see chart below).
Trip Observations
The fund manager of our Japanese equity fund Taiko Japan, Rupert Kimber, recently came back from a trip to Japan. Here are his notes.
Taiko Japan – Market outlook and review
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The sun should shine in Japan
Looking back to 2023
The restructuring of Japanese companies, which began a decade ago with the aim of improving profitability, cash flow and returns to shareholders, accelerated last year under the impetus of a wave of management buy-outs, hostile takeovers and interventions by activist shareholders. In 2023, for example, activist shareholders forced companies to make payments to their shareholders on sixty occasions.
Webinar | After a long night, light is returning to the land of the rising sun
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WEBINAR | Decarbonising the food industry
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A different way to benefit from the positive trends in Japan
Japan has been the bete noire of many asset allocators’ portfolios for most of my 34 years managing money there, and investors continue to be underweighted from an asset allocation perspective. The throwaway line of ‘it is cheap, but the value cannot be realised’ is no longer true. Change is happening and as Mr Kikuchi the Mizuho Strategist noted, there were 5 activist proposals in 2015 and this had risen to 60 in 2022. The Tokyo Stock Exchange (TSE) clarified what was expected to be considered by Japanese companies, instead of insisting what should be published. Cost of capital, return on invested capital (ROIC), return on equity (ROE), and other appropriate measures came out during March. All these measures are designed to make investing in Japan more attractive.
What does the future hold for Japanese equities?
For almost 35 years, Japan has been the victim of the collapse of one of the most gigantic double bubbles in history (real estate and equities), which explains the structural underperformance of the Japanese market for 3 decades (see chart below). The Japanese market now accounts for just over 6% of world stock market capitalisation, compared with over 50% at the peak of the great bubble at the end of 1989.