Investment company managers have given a vote of confidence to “Abenomics”, the expansionary policies being implemented in Japan.
Japan’s economic initiative boosted its equity market in 2013, giving Japan-dedicated funds strong performance – the Japan sector rose by 46% compared to 15% for the average investment company last year.
Baillie Gifford Japan Trust manager, Sarah Whitley, commented: “During the past year the yen has weakened significantly, allowing Japanese manufacturing to be re-priced into world markets, company sentiment has improved tremendously, and there are encouraging signs that growth is spreading into the broad domestic economy.”
JP Morgan Japanese Investment Trust manager, Nicholas Weindling, said: “The outlook for 2014 remains good. While many commentators question the sustainability of the uplift from Abenomics, with doubts centred on the “third arrow” of structural reform, we feel these doubts are overplayed. In fact there is significant structural reform already in play.”
Other positives for Japan include negotiations to enter the Trans-Pacific free trade area (despite opposition from farmers and other protectionist groups), a tax hike on consumption to help reduce public debt, and a raft of structural reforms, such as helping women with families return to the labour market.