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Thames River goes neutral on Japan

Thames River’s multi-manager team has cut Japan exposure across the range from overweight to neutral over concerns about the economy.

The funds, run by managers Gary Potter and Rob Burdett, cut the allocation to Japan by reducing its Japan fund holdings around a month ago.

Co-head of multi-manager Burdett explains the overweight position was a result of a rebound from the disasters the country suffered.

He says: “Japan started this year as the only developed nation with guaranteed economic growth this year as a result of the rebuild following the great East Japan earthquake and follow on tsunami. Industrial production was hit by Thai floods in the summer. There was a big rebound in terms of corporate earnings and infrastructure spend by the government.

“However, we have been surprised by how soft the economy has been in terms of economic data in the last two or three months. We think this will dissuade investors from looking to Japan although the value in the market justifies a position there, which is why we are neutral.”

Burdett says in a recent trip to Japan in May he found that managers were reluctant to predict an imminent bull market.

He points to poor export data released last month as the cause of a negative impact on the stockmarket and evidence as to the softening economy.

Whitechurch Securities managing director Gavin Haynes says: “I would concur with this point of view and we have recently cut Japan in our discretionary portfolios. The Japanese stockmarket is too cheap to ignore but there is no positive momentum.”


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