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Finding value in Japan
SJG is taking advantage of attractive valuations and corporate reforms …
Disclosure – Non-Independent Marketing Communication This is a non-independent marketing communication commissioned by Schroders . The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research .
Warren Buffett ’ s decision to up his investment in several Japanese companies in 2023 has brought the country ’ s stock market back into the spotlight . Although Buffet ’ s investments were made to seem novel by the press , the reality is he – and many other investors – have been finding the country an increasingly attractive place to invest over the past few years .
Looking at the past decade , flows into open-ended funds investing in Japan started to pick up after former prime minister Shinzo Abe came to power in 2013 . Although the pandemic led to some outflows , these have turned positive again in the last 12 months , coinciding with a period of positive performance for Japan .
That reflects growing optimism about a country that has long had a tainted reputation among investors , mainly due to the ‘ lost decade ’ in the 1990s . Reforms that are pushing companies to improve returns and pay out dividends to shareholders have helped change this and also appear to have made some investors realise just how attractive the opportunities in Japan are .
In addition , after more than two decades of deflationary pressure , the emergence of “ positive ” inflation , led by wage growth , is immensely encouraging . Indeed , the implications of this positive inflation should not be under-estimated for corporate Japan .
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Schroder Japan Trust ( SJG ) offers investors a unique way to take advantage of these trends . The trust is managed by Masaki Taketsume and has an extensive , on the ground analyst team with a wealth of experience .
Masaki takes a value-driven approach to the Japanese stock market , looking for companies whose share prices aren ’ t reflective of their true worth . It ’ s an approach that is arguably ideally suited for Japan today .
That ’ s because , although the Topix Index hit all-time highs in 2023 , there are still many companies listed in Japan trading below book value .
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