The Japanese market stands out as a key player for global investors due to its ability to combine sustainable earnings growth with attractive valuations. Richard Kaye, portfolio manager of the Comgest Growth Japan fund, highlights that the Value segment in Japan maintains a unique momentum compared to other major markets, paving the way for significant opportunities despite global challenges.
The semiconductor sector: challenges and a return to stability
A critical point remains the semiconductor sector, which has faced pressures from restrictions on China and market volatility. However, sector valuations are realigning to more historically stable levels. While uncertainties intensified after the U.S. elections, their impact varies by product, leaving room for opportunities for savvy investors.
Success stories: Fast Retailing, Recruit, and NTT Data
Beyond semiconductors, some Japanese companies continue to shine with above-average performance:
- Fast Retailing, a retail giant, achieved record margins through optimized inventory management and steady growth.
- Recruit, through its subsidiary Indeed.com, benefits from rising U.S. employment and the dynamic Japanese labor market.
- NTT Data stands out for its leadership in Japanese data centers and renewed momentum in international operations, driven by ambitious goals and greater efficiency.
Japan as a gauge of global inflation
The Japanese market’s outlook is closely tied to global inflation trends. Some investors view Japan as an indicator of this dynamic, yet the value of investing in companies with strong earnings outperformance and record-low valuations remains undeniable. Even amid global challenges, Japan continues to offer a solid opportunity for quality-focused investments.
