Recent policy moves and reforms already under way could mean being underweight Japan is no longer an...
Recent policy moves and reforms already under way could mean being underweight Japan is no longer an advisable position, according to Natasha Chetwynd, head of Japanese equities at Britannic Asset Management.
'While the backdrop is not there for strong recovery, there is potential for surprises as some of the problems are being addressed,' she said.
'Restructuring efforts should result in significant profit recovery and, while it is easy to be cynical about recent policy moves in the financial sector, valuations overall are cheap.'
Chetwynd said Japan's restructuring is happening on an economy-wide scale.
'In the past few years, corporate Japan has been focused on cutting costs and reducing debts,' she said.
'Operating earnings have risen despite any improvement in economic growth. Meanwhile, corporate debt, as a proportion of GDP, has fallen to levels not seen since before the asset price bubble of the late 1980s.'
Examples she gives of how the competitive landscape in Japan is changing are the reduction to just two steel and paper companies and the consolidation of 21 major banks down to eight.
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