- As the drumbeat of a recession gets louder, we find Japan to be one of the few markets we like. Japan value stocks, in particular, are a bright spot within the market and have delivered strong performance over the past few decades.
- Japan value stocks stand to benefit from a potential BOJ tightening and the ongoing decade-high inflation. Japanese banks, a major exposure within the value factor, are likely more resilient to banking issues seen in the West.
- We recommend the Eastspring Investments – Japan Dynamic Fund for exposure to Japanese value stocks. We like the fund for its strong, long-term track record of outperformance, systematic value strategy, and unconstrained approach which has proven to be effective.
Japan, our top equity market pick
Japanese value stocks leading the way. Reasons why Japan value has the advantage
Chart 1: The Japan value composition is dominated by heavy concentration to several sectors…
Chart 2: …while the Japan growth composition has a more balanced sectoral concentration
Chart 3: Over the past three decades, Japanese value has significantly outperformed growth and the broader market
Our recommended Japanese value equity fund
Chart 4: Fund allocation relative to the benchmark, MSCI Japan Index
A systematic investment process that goes beyond selecting undervalued stocks
Table 1: Examples of recent high-conviction value ideas
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Name of Holding |
Reasons for inclusion |
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Honda |
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Panasonic Corp. |
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Source: Eastspring Investments Data: 28 Feb 2023 |
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An unconstrained approach that will work well for Japanese equities
Strong, long-term outperformance against benchmark and peers
Chart 5: The fund has greatly outperformed both the MSCI Japan and Japan Value index
Chart 6: The fund managed to beat its benchmark significantly in recent years when Value investing started to outperform
Chart 7: The fund has been a strong performer against many of our popular Japanese equity strategies
An effective, proven value strategy for Japan
The Research Team is part of iFAST Financial Pte Ltd
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