Japan offers ‘hidden value’

The broader market has seemed to overlook a large number of companies in Japan that offer opportunities for value investing and are independent of interest rates, inflation or other macroeconomic expectations. 

According to Schroders fund manager, Liam Nunn, one of the reasons why investors disregarded the potential opportunities in this part of the word was Japan’s slow economic growth and sometimes poor record on shareholder returns. 

During the webinar, held on Wednesday, Nunn said that, in particular, his team was looking at the companies with strong balance sheets and those with management teams undertaking action against market mispricing and undervaluation. 

Speaking of his fund’s strategy, the Schroders Global Recovery Fund, he said that most investment cases had little to do with inflation or interest rates but it was about hunting the mispriced assets. 

“Speaking of idiosyncratic opportunities I think we should zoom in one area of market which really epitomise the area in which value stocks come in all shapes and sizes and that’s Japan. 

“Japan as a region was an area that stood out and we saw a lot of markets performing strongly while Japan was a bit of lag on and there were still some opportunities there that we were trying to take advantage of.” 

Nunn referred to a number of Japanese companies, which were still battling with declining legacies but, at the same time, were in the process of turnarounds of their business models. 

These included Nikon, global advertising agency Dentsu, specialist in manufacturing seat belts and electronic displays for cars Tokai Rika or operator of mobile and online services including games and e-commerce DeNA, among others. 

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