We remain underweight Japan as a region, and banks as a sector, but we wanted to reflect the potential positive impact from new leadership and another attempt at reflation in the country.
So when the likely election outcome became clear in November 2012, we took a stake in one of the large Japanese banks, Mitsubishi UFJ Financial (MUFJ). The stock was attractive because of its low valuation and the dismal growth outlook that this valuation implied.
But it also has a strong balance-sheet, with a Basel III tier-one ratio of 10 per cent. MUFJ also has growth opportunities throughout Asia ex-Japan as less healthy international banks retrench, and has wider exposure to a global recovery through its stakes in financial giants Morgan Stanley and UnionBanCal.
The stock has performed well in the Japan market rally in the past few months.
Meanwhile, Check Point Software, the Israeli developer of software and hardware for IT security, is one of our top picks in the technology sector.
Check Point’s share price had struggled during 2012 as it transitioned a number of products.
However, we feel that Check Point should be able to grow revenue by more than 10 per cent in the years ahead as it has a strong product line-up and continues to enjoy 50 per cent plus operating margins.
Tom Walker is manager of the Martin Currie Global Portfolio investment trust
