We’re proud to present our ‘Asian takeaways’ series, where we’ll share local insights on what’s happening across Asia- Pacific. From India to Indonesia, from Taiwan to Thailand, we give our views on the dynamic changes across the region, while showcasing our learnings from being ‘on the ground’ at company and site visits.
From an investment perspective, Japan has attracted global attention this year for all the right reasons. The equity market has been a strong performer year-to-date, with the TOPIX hitting a 33-year high1, and company management have put increasingly stronger emphasis on corporate governance reform. Encouraging headlines have been in abundance as to why Japan is on the rise.
Furthermore, international investor interest is growing, and on our recent trip to Japan we witnessed many foreign investors visiting Tokyo for various conferences. Their interest has been piqued by the progress that corporates are making when it comes to governance reform and wage raises, whilst the yen depreciation has been an additional catalyst for foreign inflows, as well inbound tourism.
We gained some interesting viewpoints whilst on our trip, and in our piece, we share these in more detail. In particular, we look at:
- How optimism is playing out by way of a ‘business as usual’ approach, with lockdown restrictions becoming a distant memory and pent-up demand supporting domestic spending, against an inflationary backdrop.
- The changing attitudes of management towards increasing shareholder value, with meeting discussions ranging from how to ease volatility within a business to gaining a competitive edge in a global context.
- How an improvement in the relationship between corporates and shareholders, including a reduction in the information gap between the two, should help to drive meaningful change.
- Government initiatives to attract foreign capital, for example through “Japan Weeks”, a schedule of events and conferences targeted at foreign investors and promoting Japan as a global player.
As active, bottom-up investors, we felt optimistic seeing high quality companies across all sectors demonstrating their willingness to progress.
While there are still significant advancements to be made, it feels as though change is just beginning, and with the additional tailwinds of inflation (if this can remain relatively steady) and the government’s willingness to open up the country to overseas investment, the opportunities for stock pickers in the region seem abundant.
With a near 10-year track record of investing in the asset class, we believe that our team of Japan-dedicated specialists and regional industry experts across Asia-Pacific are ideally placed to capture the opportunities in Japan today.
