Japan’s former prime minister, Shinzo Abe, implemented a raft of new policies known collectively as "Abenomics". This broad range of reforms has vastly improved the country’s economy, particularly in the areas of sentiment, domestic demand, labour and governance. As the Japanese equity market remains inefficient, managers with a long-term approach can benefit from its discrepancies. The outlook for this asset class is highly favourable as Japanese equities are currently attractively priced, on both a relative and an absolute basis.
- Governance and more broadly ESG are becoming important driving forces
- Valuations are not demanding
- Government support remains very strong
- “Abenomics” is a broad range of reforms designed to improve the country’s economy
- Japan is at the heart of a fast-growing Asian region
Nominal GDP back on a positive trend (in JPY tn) and forecast
What solutions do we offer on Japanese equities?
Sustainable Japanese equity solution
This strategy is a concentrated portfolio of undervalued stocks, based on mid- to long-term normalised proﬁt. With no sector or size constraints, the portfolio manager invests within an ESG universe using a proprietary screening methodology. Investments are made in the team’s best value-biased investment ideas, capturing either cyclical catalysts such as production & inventory cycles, or one-off catalysts such as restructuring, mergers & acquisitions, and share buybacks.
Our long/short corporate governance solution
This Japanese equity strategy is a concentrated portfolio of undervalued stocks, based on normalised mid- to long-term profits. The adoption of the Stewardship Code (2014) and the Corporate Governance Code (2015) provides a fertile ground for long and short investment opportunities for the years to come. The move towards global standards could boost leading companies’ returns, offering a clear potential to make money out of long opportunities. Improvements have not happened uniformly across companies. This has resulted in large differences between governance structures, creating the opportunity for shorting many laggard companies as well.
Investing in Japanese small caps
There are many investment opportunities in Japanese smaller companies across all industries. These opportunities are set to be further enhanced by selecting Japanese companies that show long-term growth and competitiveness. The Angel Japan Asset Management team sees the stock market as reasonably inefficient but emotional enough to provide opportunities for disciplined and experienced investors. They believe that opportunities in this complex market are best exploited with a work-intensive process and uses classical investment thinking and analysis, including meeting with companies to assess their forward 5-year earnings growth.