James Hart, investment director for Witan Investment Services, has
identified Asian areas of interest where the £1.7bn Witan and £194m
Witan Pacific investment trusts have recently increased their exposure
including Korea, Singapore and Japan.
He said Asia and emerging markets are currently the two most interesting areas in both the short and long term, having underperformed in recent years.
With its new performance benchmark incorporating a 5% weighting towards emerging markets and the addition of an EM mandate run by GQG Partners, the flagship Witan trust has upped its weighting to these areas.
Korea and Singapore are among those countries that have
suffered the most but, in turn, are where the greatest opportunities
lie.
"These countries are significantly undervalued as opposed to
their global peers. This means there are now opportunities to be found
and so our managers across both trusts are increasing exposure in these
areas," he said.
Japan opportunities
But Hart is particularly excited about Japan, which
represents 5% of the Witan portfolio and is the largest country
weighting in Witan Pacific at 27%.
"I have never come across the sort of optimism they are experiencing now in Japan. Four years into Prime Minister Abe's term
and it appears a lot of the policies he and the Bank of Japan and
Ministry of Finance have put in place mean companies are slowly
beginning to pay dividends," he said.
"We are seeing stabilisation and a small pick-up in growth,
inflation is starting to level off and we are seeing earnings come
through at the corporate level.
"Our managers have started to buy
Japanese banks after not owning them for a while. They are starting to
see the potential end of the ultra-low interest rate environment and
possible withdrawal of monetary easing.
"I would not be surprised if we look back at 2017 as the
year Japan was finally accepted back into the world's investment
environment having been ignored for so many years."
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