Simon Davis and Shep Perkins, CFA, Co-Heads of International Equities, March 5, 2015
With the economic changes instituted under Prime Minister Shinzo Abe since he took office in December 2012 slowly taking effect in Japan, companies are increasingly under pressure to deliver higher returns on equity for their investors.
Financially, these companies are in an enviable position, with sufficient assets and cash on their balance sheets to be able to withstand substantial economic pressure.
The question now is whether company managements can deliver for their shareholders. This potential revolution in corporate governance will likely take time to unfold.
In the meantime, a weak yen relative to the dollar makes valuations for a number of Japanese exporters especially compelling. There are caveats to this view, of course — for example, if emerging-market demand for Japanese goods, such as autos, weakens.