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F&C’s Niven halves Japanese overweight

F&C head of multi-asset investment Paul Niven has slashed his overweight to Japan after suspecting the market might have over-reacted to its aggressive stimulus programme.

Niven, who runs the £143.4m F&C Managed Growth and £313.8m F&C Diversified Growth fund, has halved his overweight to the world’s third-largest economy on doubts over “what could realistically be delivered in the near term” by the government’s ambitious reflationary programme.

The Japanese stockmarket soared over the opening months of 2013 after prime minister Shinzo Abe unveiled a $72.1bn stimulus package, committed to raising inflation to 2 per cent and promised structural reforms to lift the long-term growth rate.

Niven explains: “While the injection of vast amounts of liquidity is helping consumption and the real estate market, capital expenditure is yet to improve and the yen remains volatile.”

Earlier this year, Niven took his “highest conviction” position in Japan after expecting the economy to grow by about 2 per cent over the course of 2013 on the back of further fiscal stimulus and a weaker yen.

Hargreaves Lansdown investment analyst Richard Troue says: “Japan has held up a bit better than many people might have expected. But if you have had a decent slug in Japan, now could be a good time to take a little bit off the table there and perhaps look for something that is slightly better value or has not performed as well recently.”

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