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How to play the next leg of the Japan rally
by Danielle Levy on Oct 07, 2013 at 10:59
GAM’s Williams is overweight Japanese mega-banks alongside trading houses, which he says offer value, particularly with commodities out of favour. A keen focus on companies with strong balance sheets and the ability to increase shareholder returns remains crucial, he says.
Legg Mason’s Shiozumi is taking a slightly different focus. He says: ‘We have become even more confident that the most attractive area of investment in Japan lies in companies of the “new Japan” that are able to exploit opportunities relating to Japan’s advanced elderly society, changes in consumers’ lifestyles and a broadening internet-oriented economy.
‘Therefore, we are keen on companies in healthcare and elderly-related, internet-related and consumer spending sectors.’
His enthusiasm for healthcare is not echoed by Chesson, however. He points to the sector’s reliance on government budgets, which are likely to come under more pressure as the population ages.
On pharmaceuticals, which he notes are less sensitive to underlying economic improvements, he says valuations do not look attractive at current levels. Elsewhere, he is bullish on sectors geared into economic recovery, such as stockbrokers and real estate.
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