New York, NY (PRWEB) June 10, 2014
The sharp selloff in Japanese equity markets in the first months of 2014 has at least temporarily leveled as renewed, selective purchases by foreign investors are providing support, according to LS Global Advisory Group, Inc. (LSGA), a privately owned consulting firm specializing in real-time identification, analysis and tracking of securities ownership around the world.
After declining 7.6% in the first quarter and a year to date 13.0% as of April 14th, the TOPIX Index, comprising all First Section companies on the Tokyo Stock Exchange, has rebounded in recent weeks and trimmed its YTD pullback to 5.3% by June 5th. The recent firmer footing in Japanese equities has been aided by a swell of purchases still being made by foreign investors, not convinced it is yet time to give up on Japan’s economic outlook.
‘While foreign ownership levels in Japanese equities remain down considerably since December, we are seeing enough buying by foreign institutions of late that has helped stem the tide of falling valuations’, said Lucas Scheer, president of LSGA. “A great deal of portfolio reallocation among Japanese issues is occurring, and while investors have become more selective stock pickers, the new purchases have added stability.”
According to LSGA’s research, some of the institutions that have taken advantage of price pullbacks in Japanese equities in 2014 and have been recently built or increased positions in a host of Japanese equity issues include The Capital Group, Wellington Management, William Blair Investment Management, GLG Partners UK Ltd and Brandes Investment Partners.
The decline in Japanese equity markets in 2014 follows a near record year in 2013, as the TOPIX and Nikkei 225 indices surged by 51% and 57% respectively on record inflows from foreign investors. Early into 2014, however, enthusiasm for Prime Minster Abe’s ongoing Economic policies began to wane, concerns over the hike in the Consumer Tax Rate grew, and a firming of the Japanese Yen prompted overseas shareholders to take their profits and sharply reduce their exposure to the world’s second largest stock market.
What’s become clear is that widespread optimism remains across Japan’s financial markets, despite the early year sell-off, particularly among foreign investors who have shown an overall confidence in a pan-Asian resurgence due to improving market conditions. Japan is seen as one of the stronger markets able to bounce back more quickly than others in the region.
“There’s no doubt that investors are being much more selective in building their portfolios with reasonably priced Japanese equities, but they are clearly putting money back into the market, which is a very encouraging sign that considerable growth potential remains across the board,” LSGA’s Scheer added. “After the recent period of uncertainty, we see increased stability on the horizon. For those investors with vision and patience, there’s opportunity to be leveraged and profits to be realized.”
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