Webinar | After a long night, light is returning to the land of the rising sun

After a few previous false starts, the Japanese market—forgotten by investors for more than 30 years—finally appears ready for a new beginning. Japan’s economy has undergone significant changes, even though the market is still not completely aware of them. A number of serious initiatives have also been implemented by the Tokyo Stock Exchange to encourage businesses to maximize shareholder value. In this webinar held on 13 July 2023, Rupert Kimber, fund manager of Quaero Capital Funds (Lux) – Taiko Japan, provides an outlook on the changing landscape in the Japanese market and the opportunities he is investing in.

WEBINAR | Decarbonising the food industry

In this webinar held on 6 July 2023, Nancy Hirshberg, agribusiness and environmental expert and member of the Accessible Clean Energy and Net Zero Emission funds’ expert panel, talks about the decarbonisation of the food industry. Martina Turner and Olivier Ken, managers of Quaero Capital Funds (Lux) – Accessible Clean Energy and Quaero Capital Funds (Lux) – Net Zero Emission explain how they rely on Nancy’s expertise to determine their investment decisions in this sector.

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.

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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.

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Japan – Subarashii Desu

Reasons to be cheerful

With mounting overseas investor interest and a stock market that is trading, in yen terms, at 30-year highs, we review our optimistic December 22 Japan thesis, Sugoi Desu Ne (enclosed). The conclusion remains the same. A once in a generation transfer of wealth from corporates to shareholders remains a multi-year investment thesis with attractive valuations. Critically, this is supported by the recent intervention from the Tokyo Stock Exchange (TSE) over corporate governance directive as the final piece of the strong investment story.

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Looking to the Rising Sun

This article was first published in Le Temps of 8 May 2023.

While Japanese equities were popular with Swiss asset managers in the late 1980s, the world’s 4th largest economy has now all but disappeared from our portfolios. Perhaps the time has come to turn our sights back to the Rising Sun, because after a long stock market winter, Kabuto-Cho could be in for a bright new dawn.

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Impressions on the Re-opening

After 3 years, China has finally reopened its doors to foreign travelers. Alice Wang, manager of a Chinese and ex-Japanese equity strategy at Quaero Capital, has just returned from a 3-week trip to China. In the following text, she shares her impressions, sometimes anecdotal, based on numerous meetings and visits throughout the country.

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Asia – 2023 Outlook 

We continue to be cautious on the rest of the world ex-China this year and highlight our key themes ex-China recovery: we do believe that USD has peaked, and that more geopolitical tension as well as central bank buying will be good for precious metals. We also believe that some commodities, such as copper, are more exposed to a China recovery, and that commodities on the whole have suffered from under-investment in the past decade. For the first half of the year, we park most of our ex-China exposure in metals as we wait for better opportunities in the second half of the year. We have a few idiosyncratic theses scattered around the region, but we err on the side of caution as flows back to China can impact even solid companies elsewhere, particularly the outperformers from last year.

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