Nordic confidence on Japan wavers as yen falls
Japanese equity funds have lost their appeal to Nordic fund selectors because of concerns about the depreciating yen.
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Japanese equity funds have lost their appeal to Nordic fund selectors because of concerns about the depreciating yen.
Fund managers remain bullish on Japan’s corporate earnings growth as stagnant inflation seems highly unlikely to spur its central bank into unwinding quantitative easing for at least another two years.
While Danish fund selectors are renowned for being some of the most optimistic in Europe in responding to Expert Investor’s research, their latest sentiment on equities are systematically less positive compared with the European average.
Japanese equities had the largest positive shift in net sentiment across pan-European fund selectors during the last quarter, according to Expert Investor research. Click through the slides below to find out more about the views of the industry toward Japanese equities.
Demand for European equities is the lowest from Nordic fund selectors as they turn their interest towards Asia and emerging markets, according to Expert Investor.
The Japanese economy is in the midst of its longest period of growth in more than a decade, helping drive an average return of 16.11% in sterling terms for funds in the UK Investment Association’s Japan sector in 2017, with the best performing fund up nearly 40%.
The re-election of Shinzo Abe as Japan’s prime minister in September has triggered a surge in inflows to Japanese equities. Is Japan’s recent streak of strong performance set to continue or are we witnessing yet another false dawn?
Investors resumed their European equity buying binge in September, after a brief pause in August, as net fund flows into the asset class recovered to levels seen earlier in the summer. Japanese equities are also in demand.
While never in doubt, the strength of victory of Prime Minister Shinzo Abe’s ruling party in Sunday’s snap lower house election exceeded expectations, with the Liberal Democratic Party (LDP) securing more than half the number of lower house seats.
Japanese equity fund managers are backing small and mid cap companies in the tech space as well as ‘online disrupters’ ahead of the snap election to be held in October.
Net inflows into Japanese equity funds by European investors have picked up recently, as the current macro environment looks conducive to Japanese equities. Asset managers are also becoming increasingly bullish on the asset class.
Japan’s economy is beginning to show signs of life. Is this another false dawn, or a sign that prime minister Shinzo Abe’s reforms are working?