Willerequity Japan p - Willerfunds

TOPIX lost 6.9% on 23 May amid concern about China's economic outlook. Prior to the sharp drop, the market had been rising at an extraordinary pace, partly because Japanese stocks have been undervalued. By May 20, TOPIX was 44.1% above the 200-day moving average, which is the widest spread in about 60 years (since February 1953). We think the stock market has been largely driven by liquidity factors and that a rally with this momentum was due for a correction. We think that investors wanted an excuse for profit taking.

Between March 2003 and April 2004, the Japanese stock market increased 68% and then declined 14% until the middle of May 2004. After that, the tendency of the stock selection became stronger, and bottom-up approach became effective.

This time, it was up 69% since dissolution of the lower house of parliament on 16 November 2012, and the decline this time was also14%. We think that tendency of the stock selection will be stronger this time as well. Our performance between March 2003 and April 2004 was almost the same as the Topix like now, but we were up 282% versus the Topix which was up 226% until July 2007. We think that this decline represents a turning point.

Our best scenario is that Abe’s cabinet continues until 2017. With Kuroda fulfilling the term of BOJ governor (until 2018), the global economy is expected to grow 2% and Japan at 1%. Japanese CPI up 2% and nominal GDP growth become 3%. EPS of the Topix is forecast between 10% and 15% in this scenario. EPS in FY13 is 80 yen. If EPS of the Topix grows at 12.5% as median value of my scenario, EPS will be 128 yen in 2017. The Topix will be 2050 trading at 16 times. We shall try to select companies which grow more than 15%. Then, we should realize the out performance.

We will continue to actively invest in exporters (auto, machinery, electrical, chemical and precision) as well as domestics (real estate, construction, financial and retail), excluding defensive stocks (food, pharmaceutical and utilities). If our valuation and growth scenario are attractive, we will invest the middle-small cap stocks as well.

Cliquer ici pour le commentaire complet du gérant