Jupiter today announced the upcoming launch of the Jupiter Japan Select fund, a Luxembourg-domiciled Sicav, at the beginning of July.
The Japanese stockmarket was hammered last year, undermining earlier hopes that the countrys well capitalised companies and high savings ratio would see it through the downturn. Simon Somerville, who will manage the new fund as well as continuing to run the Jupiter Japan Income fund, says the medium-term prospects for the country are still significantly better than other developed economies.
I suppose the disappointment has been the unexpected severity of the global consumer slowdown that has hit Japanese exporters, he says. Domestic Japan, however, looks to me to be a much safer haven.
Consumer spending within the country has remained relatively resilient and the worst news from exporters appears to have passed. This is combined with action taken by Taro Aso, the countrys prime minister, whose government instituted a 13.93 trillion (86.8 billion) supplementary budget to help stimulate the economy.
Key to Japans growth in the future, however, will be its ties with Asian trading partners.
I think the China Asian growth story is much more significant than the Japanese domestic story [over the long-term], and the Japanese are aware of this, says Somerville. What Japan cant do is compete against China in terms of mass production.
Despite the funds Japan focus it does have the flexibility to invest up to 20% of its portfolio outside of the country in Asia, although the manager stresses it is not aiming to be an Asia Pacific vehicle. In fact, while investors are piling back into emerging markets like China, Somerville says it has pushed the worlds second largest economy off the radar, which is a sign that it is time to buy.
Lingering concerns for investors will include potential currency risk following the steep rise of the yen last year and elections due by September which could see a change of administration.
Somerville says although the prospects of the yen may not be ideal, they are at least less bad than for other major currencies. He also says that while Asos popularity has been sliding, the policy differences between the two main parties are negligible so there will be little concern in the market over political change.