The “once in a generation shift” taking place in Japan makes it an attractive place for investors, according to Japanese equities expert Nicola Takada Wood.
Takada Wood has been working in Japanese equities for the past 20 years and believes interest in the overlooked area is picking up.
“When I first started, Japan was very much considered a major market for investment. At the time it was the second-largest market, all the banks had very well staffed Japan desks,” said Takada Wood.
“But as Japan’s economic presence started to wane, so did investors.
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“Most investors now have it as an afterthought not as a core element of their portfolio.”
She spoke to FT Adviser six months into her new role as managing director for Japan at Asset Value Investors.
“It has been very interesting and exciting to see things pick up in Japan,” she added.
It has been more than 10 years since so-called ‘Abenomics’, the set of economic policies implemented under Japanese prime minister Shinzo Abe.
Takada Wood said investors are slowly coming back to Japan, in response to changes made by the prime minister.
“It is the third biggest market in the world but people do not invest in Japan as the market was considered opaque or they had a bad experience in the past,” she said.
“The hope is that people will lift their heads up and look further afield.
“Japan was thought of as opaque but I do not think that is the case any more. I think reform is a once in a generation shift we are seeing.”
AVI’s Japan Opportunity Trust works with the 20 or so names in its portfolio to try and prompt changes which would make the companies more attractive to overseas investors.
This includes improving disclosure documents and encouraging CEOs and senior leadership to hold shares in their companies, something she said is still unusual in Japan.
Takada Wood said: “We are working with companies to try and create that alignment to try and get them to take equity stakes in their companies.
“For some companies it is relatively quick and is immediately accepted but other companies are like ‘We don’t want it to be about us, we want it to be about the company as a whole’.”
For the remainder of Takada Wood’s first year at AVI, she is hoping for company improvements in the upcoming AGM season in Japan and for a stronger Yen.
tara.o’connor@ft.com
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