Long-term growth and innovation in Japan
Professional investor Nicholas Weindling picks three Japanese stocks that should benefit from structural trends that promise long-term sources of return.
A professional investor tells us where he'd put his money. This week: Nicholas Weindling of the JP Morgan Japanese Investment Trust picks three stocks.
The JP Morgan Japanese Investment Trust contains innovative and fast-growing companies. We seek out what we consider to be the best investment ideas in Japan to maximise returns, concentrating on firms with excellent long-term growth prospects that are not dependent on the economic cycle.
We believe that an active style of portfolio management that focuses on stock selection conducted by experienced, locally based investors offers the greatest opportunity to add value. We use extensive bottom-up research to identify undervalued earnings growth. Our approach can be summarised as aiming for growth at a reasonable price. There are several key structural trends that we have identified as promising long-term sources of return. Examples of these themes and stocks are detailed below.
Profiting from ageing
Nihon M&A Center (Tokyo: 2127)
The march of the robots
The robot-usage ratio in emerging countries such as China and India is still extremely low, so there is significant room for growth. Japan has several leading factory automation providers, such as Keyence (Tokyo: 6861), which should benefit from this trend.
Cosmetics are popular in China
Shiseido (Tokyo: 4911)
Asian consumers, especially in China, tend to spend more on skincare products than on fragrances or make-up. Shiseido has a strong presence in high-end skin-care products, so it is very well positioned to benefit from rising Chinese spending power. We bought the stock amid clear signs of turnaround following a takeover by new managers. The profit margin is improving from a low base.