Fidelity Japan Trust PLC (LON:FJV) published its monthly factsheet for the period ended November 2024.
Portfolio Manager Commentary
Japanese stocks reacted positively to the result of the US Presidential election, with higher long-term rates and a weaker yen leading to sharp gains in financials and global cyclicals. Subsequently, growing uncertainty around the policies of the incoming Trump administration and geopolitical risks hurt market sentiment, and key indices closed the month in negative territory. At a sector level, banks led the gains within financials, while domestic-oriented segments also outperformed. Conversely, Trump’s threats to impose 25% tariffs on imports from Mexico and Canada, and a further 10% on shipments from China, coupled with a stronger yen, weighed on export-oriented industries.
For the first time in three years, the outlook for corporate earnings is less dependent on currency factors and there is the potential for domestic mid-caps to perform. This segment of the market has seen valuation multiples compress to historical lows. Meanwhile, Japan-specific drivers, such as domestic reflation and rising wages; and TSE-led governance reforms represent multi-year structural trends that are creating new investment ideas. The initial governance charge was led by low price-to-book companies and while most of the low hanging fruit has been harvested, we see greater potential for change among mid-caps and sustainable growth companies.
Over the 12 months to 30 November 2024, the Trust recorded NAV and share price returns of -1.8% and -5.7% respectively, compared to 13.3% for the index.
Fidelity Japan Trust PLC (LON:FJV) aims to be the key investment of choice for those seeking Japanese companies exposure. The Trust has a ‘growth at reasonable price’ (GARP) investment style and approach – which involves identifying companies whose growth prospects are being under-appreciated or are not fully recognised by other investors.
