Japanese Equities are often on the back burner of Professional Investors Portfolios. With each new leadership change over-promising and under-delivering on fundamental challenges that cause continual concern. But is that changing? Several datapoints would suggest it is:
Over the past 12 months, share buybacks have increased by almost 70% versus the previous year. Suggesting management have renewed confidence in their company's fundamentals. A good sign for shareholders.
A second, more persistent problem in corporate Japan has been Corporate Governance. But with revisions to the Japanese Corporate Governance Code enacted in June 2021, attention to diversity and Task Force on Climate-Related Financial Disclosures for Prime Market listed companies is gathering tangible momentum.
Then there is the divergent macro backdrop and valuations. With the Bank of Japan (BOJ) maintaining its negative policy rate and yield curve control purchases - despite peak inflation forecasts of 2% for 2022 - the Yen is trading at its lowest level versus the USD in 20 years. Which in turn creates a competitive pricing export edge for its world class auto and robotics companies. Lots to be positive about for investors.
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