1 | The evolution of corporate Japan
It’s an exciting time to invest in Japan. Although Japan’s leaders continue to face tough economic and fiscal challenges, a rising proportion of profits generated by Japanese companies are actually produced outside Japan. This allows Japanese firms to benefit from growth in Asian and emerging markets, and therefore seize opportunities created by the inexorable rise of an affluent middle class.
2 | The evolution of corporate Japan
With a universe of over 3,000 listed companies across a broad array of industries, Japan is home to many leading international brand names. Our investment team favors high-quality companies with robust business models, strong management, and superior potential for long-term growth. Detailed, fundamental company research lies at the heart of the investment process.
3 | The evolution of corporate Japan
Aberdeen Asset Management’s global reach is underpinned by a truly local perspective, and we have had a local presence in Asia for almost thirty years. Aberdeen’s Tokyo investment team is fully integrated with Aberdeen’s broader Asian Equities Team, and this ensures that the portfolio benefits from a longstanding expertise at a regional and global level.
Diverse equity market
Not only does Japan boast enviable strengths such as a high-quality workforce and technical superiority, there are also many world-class companies that are global leaders in their respective fields. The Topix, Japan’s primary equity index, reveals breadth in the types of companies found in Japan and we feel there is an unmistakable strength in the consumer goods sector.
Corporate Japan is in good shape
Investors familiar with our style will know that we are indifferent to market behavior over the short to medium term. As bottom-up investors we are only ever interested in finding good stocks, based on our own research, and then investing for the long term.
Japan is home to numerous first-rate companies, many of which are global leaders in their respective industries. We seek those with robust balance sheets and a respect for shareholders.
Unfortunately, finding good companies in Japan is more painstaking than it is elsewhere because of weak corporate disclosure, disregard of outside shareholders and language barriers. Yet because investors are easily put off we see this as an opportunity. Corporate governance does seem to be improving. The better-run companies are beginning to take on independent non-executive directors (although not yet a legal requirement).
Abe has promised to accelerate reforms for corporate governance standards, with tougher regulations on insider trading, review of auditing firms and a more effective whistle blower system.
Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, as well as political and economic risks. These risks are enhanced in emerging-markets countries.