Many companies are mispriced because they are misunderstood. Find out how a disciplined valuation approach is uncovering opportunity in overlooked areas of corporate Japan.
This year has been characterized by very large swings in market sentiment for Japan equities. Increasing market volatility has coincided with short-term news linked to both comfort with and concern for the global cycle.
Investors focused on the ever changing daily macroeconomic news have found it a big challenge to use this, often contradictory, information to inform their investment decisions. Amid such market uncertainty, investors have been chasing investment returns over shorter and shorter time frames, often leading to disappointing results.
The reason is that exuberance for popular market themes drive unrealistic return expectations and a total disregard of the starting price of an investment. In this environment, investors often overpay for perceived comfort, but overlook more attractively valued opportunities. So, the stand-out investment opportunities are found by going against the herd. This requires patience and a deep understanding of the drivers of trend earnings, but it also offers the greatest potential long-term rewards.
At Eastspring, we believe it is almost impossible to consistently forecast the effects of short-term news on markets. Forecasting relies on an ability to ‘time the market’ in a world with an uncertain future. Instead, we actively avoid the economic news headlines. Share prices tell us how much the market is discounting the headlines. The cheaper the share price, the more the headline is discounted. So, rather than looking at headlines, we focus on starting price and company valuations, which are far more important to future shareholder returns.
Watch this video to find out more about Eastspring’s well-defined and disciplined approach to identify opportunities in Japan and how our team is delivering strong, longer-term performance by doing things differently from the broader market.
Disclaimer
This document is produced by Eastspring Investments (Singapore) Limited and issued in the United Kingdom (for professional clients only) by Eastspring Investments (Luxembourg) S.A. – UK Branch, 125 Old Broad Street, London EC2N 1AR, authorised and supervised in the UK by the Financial Conduct Authority (FRN 605525).This document is solely for information purposes and does not have any regard to the specific investment objective, financial situation and/or particular needs of any specific persons who may receive this document. This document is not intended as an offer, a solicitation of offer or a recommendation, to deal in shares of securities or any financial instruments. It may not be published, circulated, reproduced or distributed without the prior written consent of Eastspring Investments. Investment involves risk. Past performance and the predictions, projections, or forecasts on the economy, securities markets or the economic trends of the markets are not necessarily indicative of the future or likely performance of Eastspring Investments or any of the funds managed by Eastspring Investments. Information herein is believed to be reliable at time of publication. Where lawfully permitted, Eastspring Investments does not warrant its completeness or accuracy and is not responsible for error of facts or opinion nor shall be liable for damages arising out of any person’s reliance upon this information. Any opinion or estimate contained in this document may subject to change without notice. Eastspring Investments (excluding JV companies) companies are ultimately wholly-owned/indirect subsidiaries/associate of Prudential plc of the United Kingdom. Eastspring Investments companies (including JV’s) and Prudential plc are not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America.
