JPMorgan Japan Small Cap Growth & Income plc (LON:JSGI) has now published its October 2023 factsheet which can be found below.
Monthly
As of 2023/10/31
- The MSCI Japan Small Cap Index fell by 2.8% in Japanese yen terms, driven mainly by external newsflow over the month. Concerns over the escalating geopolitical conflict in the Middle East as well as policy uncertainty around the Bank of Japan and the US Federal Reserve kept the market volatile over the month.
- The portfolio underperformed the benchmark over the month. Sector allocation detracted, which was partially offset by contribution from positive stock selection. At a sector level, underweight positions in banks as well as overweight positions in semiconductors and semiconductor equipment detracted the most, while underweights to automobiles and components and overweights to materials contributed the most.
- At the stock level, overweight positions in Taiyo Yuden (electronic components) and MEC (adhesion enhancer products) detracted the most. Taiyo Yuden fell on concerns over a potential dilution from the recent issue of convertible bonds, while MEC fell on profit-booking after a period of strong outperformance. On the other hand, overweight positions in Osaka Soda (pharmaceutical components maker) and Nippon Sanso (industrial gases) contributed the most. Osaka Soda strongly outperformed on an improved outlook for its anti-obesity molecule supply contracts with large global pharmaceutical companies. Nippon Sanso rose after its quarterly results met expectations despite a challenging macroeconomic environment.
Looking Ahead
As of 2023/10/31
- Acceleration in improvements in corporate governance and balance-sheet management are likely to have a long and strong duration. Shareholder activism has started to be both accepted and successful. Economic activity has been stronger, with encouraging wage trends supported by the structurally tight labour market. Wage growth should help end Japan’s long period of damaging and seemingly intractable deflation and have a positive impact on consumption and the overall economy. The structural changes taking place in the Japanese corporate sector and the economy are expected to provide attractive investment opportunities for investors.
JPMorgan Japan Small Cap Growth & Income Investment Trust (LON: JSGI) is actively managed by a Tokyo-based investment team and provides access to the innovative and fast-growing small and medium-sized companies that are at the core of the Japanese economy, while paying a regular quarterly income.
