The Japanese stocks I am go back up in the spotlight with the market near multi-decade highs, partly because of expectations of governance changes, but mostly because Japan has long been ignored and in our view now offers an unmatched combination of growth and value. We believe the Japan’s real potential has not yet been realized, as large companies trade at a discount to global peers. This explains Richard Kaye, Portfolio Manager of Comgest Growth Japan fund.
Japanese stocks, interest in tech grows
The yen’s decline to multi-decade lows, generally attributed in Japan to interest rate gaps or the pace of central bank balance sheet expansion, “has highlighted a quite faithful correlation with the so-called Value factor: when one stabilizes or reverses course, the other tends to do the same”.
Lasertech, which makes photomask inspection systems used to project images of semiconductor circuits, continues to benefit from the strong growth in chipmakers’ adoption of advanced design technologies.
Pan Pacific International Holdings, which operates the Don Quijote discount chain, continues to post strong monthly and quarterly growth thanks to increasing store footprint, the development of higher-margin private brand products, expansion into the supermarket segment (where it leverages its superior supply chain to offer a viable alternative to incumbents) and the return of tourist consumption.
Comgest’s analysis
Orix, provider of financial services for small businesses, a major player in the areas of leasing and renewable energy, continues to record strong organic growth, forecasting steady growth. The CEO of Orix Bank explained that this growth strategy focuses on environmental projects and the management of trusts for retail clients.
Kokusai Electric, semiconductor deposition systems company, has a unique position in technologies such as atomic layer deposition (ALD), which benefits from the industry’s focus on smaller circuits. Kokusai Electric has implemented a significant operational transformation and has abandoned earnings-dilutive peripheral businesses to focus exclusively on its strengths in the semiconductor business.
Asia rhymes with opportunity
The Japan – concludes the expert – “offre opportunities in the segment of leading global Japanese companies that profit from the Asia’s growth and changes in the country itself. We look at Asia’s growth as an opportunity for companies equipped with essential technologieslevel of supply chains For automation and semiconductors”.
