Threadneedle chief investment officer Mark Burgess belives Japanese equities are 'at the frontier' and their future direction could could go either way.
Despite prime minister Shinzo Abe's agressive monetary policy stance lifting GDP, the future of the Japanese stock market continues to hang in the balance, Burgess (pictured) said.
Speaking at a breakfast briefing, the Threadneedle CIO revealed he had been 'wooed' by the market and added to his position after Japan's recent dip.
However he sounded some caution given that investors have been burnt in the past.
He said: ‘Normally and historically, whenever Japanese equities have looked interesting and cheap, the right thing to do has been to go and lie down in a dark room.'
This time it's different
But Burgess believes that ultimately, Abe's measures will be positive, and Japan equities continue to offer value in the short-term.
He said: 'It is impossible to overstate how much Abe is doing, considering every conceivable action to kick start the Japanese economy.
‘What you are seeing now is the frontier, and we could go either way. [But] we still hold the view there is good value to been found by investors on the next 12 to 18 months.’
Moreover, Abe's grip on Japan has tightened over recent weeks after his party won a majority in the upper house elections.
This was a key victory for the LDP leader, as it gives him greater control over policies.
Burgess said that a number of investors were waiting on the outcome of this vote before believing that Abe will be able to push through his planned structural reforms.
He added that while this could cause Japan to surprise on the upside and catch out some bears, the weight of history does lend itself to caution.