e-fundresearch.com: What are your personal lessons learned from 2014 market developments?
Hiroyasu Sato: 2014 was the year where we witnessed a significant impact on the equity market from the monetary policy of the central bank. We felt a larger influence by the central bank rather than other factors such as global geopolitical risk and an economic slowdown outside the US.
Hinweis: Yuichi Alex Takayama (General Manager) von Tokio Marine Asset Management ist Speaker beim ARC Outlook 2015 am 21. Jänner in Wien
Specific to the Japanese equity market, we saw unprecedented increasing interest in corporate governance and shareholder return in 2014. In this context, the management approach to corporate governance became a very important factor for investment.
e-fundresearch.com: With regards to the new year 2015: How optimistic is your view into the future and what obstacles and challenges should investors be prepared to overcome in 2015?
Yuichi Alex Takayama: We believe the Japanese equity market will maintain its positive momentum in 2015 driven by strong corporate earnings. We expect the difference in the monetary policy stance between Japan and the US may help the yen to further weaken, which could help the profitability of exporters. In addition to this, we believe an increase in wages combined with weak oil prices will improve the purchasing power of Japanese consumers and this may create a better environment for domestic industry in Japan. We have a positive outlook for the equity market from the domestic angle.
The risks are however, some external factors such as geopolitical risk, the euro problem, and the timing of US tapering.
e-fundresearch.com: Why should investors consider an increase in allocation to your asset class in 2015?
Yuichi Alex Takayama: We believe that the Japanese equity market is changing. More importantly, the nature of the change is specific to Japan which might provide investors with very unique investment opportunities.
Japanese companies have in the past been seen to be unfriendly towards its shareholders as the main source of their finance has traditionally been bank loans. It took some time to recognize that the low levels of ROE, which was the result of the attitude mentioned above, was the main cause of the sluggish equity market in the previous 20 plus years. After finally realising the problem, a series of measures, such as the introduction of the JPX400, the Japanese version of the Stewardship Code, and the Corporate Governance Code, were swiftly implemented. The reform of the GPIF, the world’s largest pension fund, was another initiative. In addition, we expect there will be more measures to come.
We believe this series of subtle but continuous measures could result in positive changes in the mindset of Japanese corporations and the asset management industry, which in turn may create a better investment environment for investors.
