July 23, 2014

Japanese equities dip is an opportunity to buy

A recent fall in the Japanese equities market could present a case to selectively buy according to Fidelity’s head of Equities for Japan. With the index recently experiencing a 12.5% dip since the start of the year, there is a view that there is an opportunity present:

Alex Treves, Head of Equities for Japan at Fidelity Worldwide Investment, comments:  “The recent correction in Japanese stocks can largely be attributed to emerging market risk and a stronger yen. At this stage, the pickup in the global economy remains on track. Japan’s recovery continues to proceed steadily and the reflation theme remains on course. Furthermore, Japan has led the world in terms of positive earnings revisions over the past year and the outlook for earnings growth compares favourably with all other major regions.

“Prime Minister Abe will consolidate his policy agenda in the coming months and provide greater clarity on his multi-year roadmap for reforming Japan. It is important to be realistic about the likelihood of a sudden transformation, but equally the prospect of a long term improvement in Japan’s outlook is very much alive. Crucially, the patient bottom-up observer can find encouraging signals of change on the ground.

“While risk assets are likely to remain volatile for the time being, we view the current correction as an opportunity to selectively add on weakness and our analysts are actively promoting ‘buy on dip ideas’ to portfolio managers.”

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