Do Japan's 'unloved' large caps present a buying opportunity?

Japan was one of the most popular areas with UK investors in 2015, with some £1.2bn of flows into the IA Japan sector and more than £400m going into the IA Japanese Smaller Companies sector, as investors tried to hone in on those domestic companies benefitting from Prime Minister Shinzo Abe's 'three arrows' reform programme.

So far in 2016 however, Abenomics can only be described as having had partial success at best. Despite improvements at a company level, Japan's economy grew by just 0.2% in the second quarter, revised up from an initial estimate of zero.  Data in August also showed annual headline inflation fell further into negative territory, while yen strength (up 16% against the US dollar in 2016 so far) continues to hit business earnings. The impact on investor sentiment has been severe: so far this year, the IA Japan sector has posted six consecutive months of outflows.  Lure of Japan remains...