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.

Recommended

Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
19 Feb 2021
Three winning stocks for a post-pandemic world
Share tips

Three winning stocks for a post-pandemic world

Professional investor Dan Lane of Freetrade selects three stocks that he thinks will keep their relevance in a changing world.
1 Mar 2021
DR Horton: US housebuilder that's piling up profits
Trading

DR Horton: US housebuilder that's piling up profits

US housebuilder DR Horton’s stock rests on firm foundations and looks cheap. Matthew Partridge looks at the best way to play it.
26 Feb 2021
Investing beyond China: how to buy into wider Asian markets
Investment trusts

Investing beyond China: how to buy into wider Asian markets

There are several reasons to be sceptical about China’s development, says Max King. What’s more, there is vast potential in other regional emerging ma…
26 Feb 2021

Most Popular

A beginner’s guide to bitcoin: what is bitcoin?
Bitcoin

A beginner’s guide to bitcoin: what is bitcoin?

As a completely novel concept for many people, bitcoin can take a little effort to get to grips with. In the first of a short series on the cryptocurr…
1 Mar 2021
What is “yield curve control” and why is it coming to a central bank near you?
Government bonds

What is “yield curve control” and why is it coming to a central bank near you?

Central banks around the world are determined not to let interest rates go up too quickly or by too much – a practice known as “yield curve control”. …
1 Mar 2021
What to watch out for in Budget 2021
Budget

What to watch out for in Budget 2021

In his 2021 Budget, Rishi Sunak will lay out his vision for post-Covid Britain – how to fix the public finances and repay all the pandemic stimulus wi…
2 Mar 2021