Jake Elmhirst from Coller Capital speaks to James Dunn from The Inside Network on secondaries’ role in the private equity market. The Inside Adviser
The alternatives sector is unique in that it’s largely defined by what it’s not. Accordingly, how you fit alternatives within your existing asset class structure will depend on relativity, and how the investments interact with the other asset classes according to Atchison’s Kev Toohey.
Forget recession: Japan didn’t get the memo
Despite provisional figures released in February indicating recession – Japan notched second consecutive quarter of economic contraction – revised data aired in March showed that gross domestic product (GDP) was 0.4 per cent higher in the last three months of 2023 compared to a year earlier.
The Land of the Rising Sun’s narrow escape from recession comes as the country makes progress on exiting deflation, amid growing speculation that the Bank of Japan may shortly announce the first interest rate hike in more than a decade.
Given the slowdown in China and its own tepid domestic demand and private consumption, it is an admirable effort for the Japanese economy to grow. Japan’s economy has struggled to grow throughout several “lost decades” following the collapse of a massive asset bubble in the early 1990s.
But despite the economy’s struggles, the Japanese stock market is off on a tear, with the benchmark Nikkei 225 up 16.5 per cent so far in 2024; and along the way, notching a fresh all-time – after 34 years – and surpassing the 40,000 mark for the first time in its 74-year history. The Nikkei is surging as foreign investors take advantage of the cheap yen and corporate governance reforms that have boosted returns for shareholders.
One such investor is Australia’s Future Fund, which dipped its toe into the Japanese market earlier this year.
Belatedly, many investors around the world are looking for the best way to deploy funds into Japan.
Platinum Asset Management’s $446 million Platinum Japan Fund is one to consider, with its robust performance and strategic investments, and should be one of the first investments considered by those looking to participate in Japan’s resurgence. This article delves into the compelling narrative behind Japan’s current investment landscape, highlighting key economic shifts, market valuations and the strategic positioning of the Platinum Japan Fund, including its three largest holdings.
A transformative economic landscape
After decades of deflation and sluggish growth, Japan’s economy is showing signs of a vibrant revival. Key to this transformation is an ambitious agenda of corporate governance reforms aimed at enhancing capital efficiency and shareholder rights. These reforms are poised to unlock higher productivity and profitability across Japanese firms, signalling a new era of economic vitality.
Despite the record high achieved by the Nikkei, the Japanese stock market offers an appealing valuation landscape, maintaining reasonable price multiples. That presents fertile ground for growth at judicious valuation levels, particularly for those invested in the Platinum Japan Fund.
Technological Prowess and Structural Reforms
Japan’s accelerated push towards digitalization and technological advancement has opened new avenues for investment. The COVID-19 pandemic catalysed this shift, revealing substantial gaps in digital infrastructure and creating a surge in initiatives aimed at digital transformation. Companies leading this digital charge, especially in enterprise software and payment processing, have recorded substantial gains, a trend on which the Platinum Japan Fund has capitalised efficiently.
Simultaneously, structural changes and supportive policies from the Japanese government and corporate sector underscore the country’s commitment to reviving its manufacturing sector and incentivising investments in critical industries like semiconductors and electric vehicles. These efforts are fostering a conducive environment for sustainable economic growth and innovation.
Spotlight on the Platinum Japan Fund’s top holdings
The fund’s strategic investments in Toyo Seikan Group, Ezaki Glico Co., Ltd., and GMO Payment Gateway, Inc., reflect a balanced mix of traditional and modern sectors poised for growth. Toyo Seikan Group leads in innovative packaging solutions, while Ezaki Glico Co., Ltd. delights consumers worldwide with its confectionery products, including the iconic Pocky. GMO Payment Gateway, Inc. supports Japan’s burgeoning digital economy with its comprehensive online payment services. These holdings epitomize the Fund’s approach to capturing growth across diverse sectors, underpinning its strong performance and the broader investment thesis for Japan.
Why Japan? Why now?
Japan’s investment landscape is undergoing a dynamic evolution, marked by a confluence of positive economic indicators, robust policy reforms and corporate governance improvements. For investors seeking to diversify and tap into the growth potential of a revitalising economy, the Platinum Japan Fund offers a strategic entry point. With its focused investment strategy and deep understanding of the Japanese market, the fund is well-positioned to leverage Japan’s economic revival for the benefit of its investors.
As Japan navigates through this pivotal moment in its economic history, the questions of “Why Japan? Why Now?” resonate more than ever. But the answer to both is that the strategic confluence of economic revival, technological advancement and structural reforms presents a timely opportunity for discerning investors. Through the lens of the Platinum Japan Fund, investors have the chance to participate in the unfolding story of Japan’s resurgence, harnessing the potential for robust returns in a diversifying global portfolio.
