Investors are tapping those firms that are able to exploit and benefit from structural societal shifts occurring in Japan and which can potentially create long-term value.
The narrative of Japanese equity markets in the past few months is therefore rather more nuanced than the headlines suggest. Given that we are likely to see an easier monetary and fiscal stance in coming months, expect recent yen strength to be unsustainable over the longer term.
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Investors should now consider it prudent to start partially re-hedging some of their Japanese equity exposure.
Michael Stanes is an investment director at Heartwood Investment Management
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