Regular readers will know that we have been fans of Japanese equities for some time now. Last year, was fantastic for those who followed us in. This year hasn’t been so good – the Nikkei is down 14% from its levels at the beginning of the year.
The good news is that, according to Andrew Lapthorne of Société Générale, “deep value” is beginning to emerge in the Japanese equity market.
Lapthorne uses a version of Benjamin Graham’s deep value screening process and has found it to be pretty successful in the past.
Today it indicates that with net profits on the rise in Japan (up over 25% in the first quarter of this year), “the only developed market region seeing value emerge is Japan.”
Add in the “potential for more central bank action”, and a “yen hedged foray” back into Japanese equities “may be the better choice than simply continuing to pay over the odds for more expensive US and European equity names.” We’d agree with that.