The onshore Martin Currie Japan fund is building up its exposure to large caps following a poor run ...
The onshore Martin Currie Japan fund is building up its exposure to large caps following a poor run by blue chip stocks relative to the rest of the market.
The portfolio, co-managed by John Millar and Michael Thomas, is maintaining its mid-cap bias and is also underweight in small-cap stocks.
Millar argued blue chips are now on attractive valuations, making them a target for the fund.
In terms of sectors, it is underweight defensive areas of the market, such as utilities, food, information and telecoms.
Technology is a recent underweight and, despite investors traditionally seeing the sector as strong within Japan, Millar said the stance was taken due to competition elsewhere in the region.
"It has become clear that progressively other Asian countries are eating into Japanese dominance in a number of areas," he added.
"For example, people will buy Samsung rather than Panasonic because they are similarly priced. Competitive advantage in pricing power is gradually crumbling."
The portfolio is overweight areas that will benefit from reflation such as financial services.
Martin Currie is a firm believer that reform is taking place in Japan, and it is bullish on the economy.
Millar said: "What we are seeing, and think we will continue to see, is the normalisation of a number of problems that hit the economy and stock market in the 1990s. The economy is moving out of deflation and the move to reflation at the moment is unique to mature economies."
Portfolio overweight large caps.
Millar underweight small caps.
Believes reform is for real this time.
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