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Japan is the third-largest economy in the world, and accounts for 10% of global market capitalisation. The Japanese prime Minister, Shinzo Abe, has 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 inflation. As the Japanese equities market remains inefficient, value managers benefit from market discrepancies through a long-term bias towards undervalued stocks. The outlook for this asset class is highly favourable, as Japanese equities are currently attractively priced, both relatively and on an absolute basis.
The strategy for Japanese equities is a concentrated portfolio of undervalued stocks, based on mid-to-long-term normalised profits. With no sector or size constraints, the portfolio manager invests in the research team’s best value-biased investment ideas, capturing either cyclical catalysts, such as production and inventory cycles, or one-off catalysts, such as restructuring, mergers & acquisitions, and share buybacks. Because of its bottom-up selection process, the portfolio’s market capitalisation or sector bias may vary.