Rathbone Unit Trust Management’s David Coombs has said the recent dip in Japanese equities provides a good opportunity for investors to back the world’s third-largest economy.
The multi-manager said Japan was 40 per cent cheaper than the US on a current price-to-book basis, adding that while he was “not super bullish on the region” there was “value to be had”.
“Also, if you believe that the third-quarter economic figures will be strong, then this dip provides a good entry point,” he said.
Mr Coombs acknowledged there had been some “very mixed economic data” out of Japan, but the recent reporting season was “on the whole very positive”.
He said: “Japan has never been a straightforward investment, but we believe that ‘Abenomics’ still represents a credible strategy and there has been some progress.”
The Japanese equity market was recently boosted by the announcement the country’s government pension investment fund would increase its domestic equity allocation from 12 per cent to 20 per cent.
Market commentators have also suggested this is likely to encourage other large pension funds to do the same, which could provide an additional tailwind for the market.
Mr Coombs did say, however, investors needed to be aware the market’s strength would depend on the reaction to prime minister Shinzo Abe’s policies, which are aimed at boosting economic growth, including raising the sales tax again.
