Hugh Hendry, the Eclectica hedge fund manager, has said his scepticism on Japanese monetary policy has not prevented him from running a long in the market as his 'wild bullish card,' as he anticipates a further rise in asset prices.
'It is our contention that Japan's long spell in the sin bin has left its society particularly vulnerable to the charms of a radicalisation of monetary policy,' the manager said in the December commentary of the Eclectica fund.
He argued that the nation 'will struggle to produce the incremental GDP necessary to service and repay its gigantic sovereign debt load,' which will force the central bank to push for inflationary price targeting, pushing up asset prices.
'You should buy Japanese assets if you fear that Abenomics will fail to restore the fortunes of Japan (which it probably won’t),' the manager said. 'Want to make real money? Make it in Japan.'
Following what he described as his 'mediocre investment performance' the manager said he is 'no longer the last bear standing,' as central banks continue to print money to prop up the global economy.
'I’ve been sensible. But in doing so I have imposed qualitative, one-way causality arguments onto a market that just doesn’t care,' the manager explained, adding that he could no longer wait for the market to fall.
'Only a foolish investor would stand in the way of this bull market...it’ll crash of course, just not for a while,' he said.
The Japanese market has rallied sharply this year after its government introduced aggressive monetary policies, including targeting 2% inflation and quantitative easing, although it pulled back following the global 'taper tantrum' caused by the US Federal Reserve in April.
Over the last three years Hugh Hendry has returned 7.9% versus an average Alternative Ucits - Global Macro return of -0.4%.