Page 13 - ISQ October 2020

INVESTMENT STRATEGY QUARTERLY

This feeling of slightly slipping behind the curve is a common Meanwhile ‘Suganomics’ is likely to be a continuation series
one for those looking at the Japanese economy from outside. of policies with an initial focus on securing a longer political
For all its global creative influences over time, the 21st cen- term via a general election in the next year (and possibly much
tury has been more influenced by other Asian powers such as sooner) as opposition parties appear very fragmented. So,
South Korea and - inevitably - China. exciting times potentially for political watchers, if less so for
economic or financial market ones. But this does not mean
However, at least at a corporate level Japan does still have a the Japanese market is not of interest for investors. Being
few cards to play. Helpfully during the ongoing pandemic, the active can always carry its own rewards.
high average cash positions have provided a buffer and there
have been some minor signs of improving shareholder corpo-
rate governance. And whilst Japan was the originator of the
‘zombie company’ concept - generally defined as companies KEY TAKEAWAYS:
which without banking sector support would be insolvent as • Yoshihide Suga recently took over as the
they struggle to cover their interest payments - this is a Japanese prime minister from the long-serving
growing concern in economies all around the world. Shinzo Abe

Japan feels like a financial market that individual stock selec- • Monetary and fiscal policy initiatives appear
tors can especially add value in. Certainly Warren Buffett’s unlikely to particularly change
recent investments in the country captured a few headlines • The Japanese market which consistently over
and should inspire others. But whilst such bottom-up instincts recent years has maintained an ‘undervalued
and actions may prove opportunistic, do not be lulled into but underowned’ in the world’s biggest regular
thinking the broader ‘top-down’ picture is particularly fund management survey
evolving. Akin to the pan-European markets, the composition
of the Japanese bourse is quite cyclical / value centred and • Japan feels like a financial market that indi-
would disproportionately benefit from a general global vidual stock selectors can especially add value
recovery from the pandemic. Global perception will also be in
aided by a successful hosting of the Olympics which currently
are still set to be hosted next summer following the pandem-
ic-induced postponement.

Robots installed per 10,000 employees in
manufacturing businesses in 2019

The U.K. has the lowest robot density among leading economies

Robots installed per 10,000 employees in manufacturing in 2019
Singapore 918
Korea 855
Japan 364
Germany 346
U.S. 228
Italy 212
Netherlands 194
France 177
Canada 165
Switzerland 161
U.K. 89

Source: International Federation of Robotics

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