Asia

Legg Mason Equity Japan manager expects trend favouring domestic-oriented small-cap growth to continue

With some justification, investors took an increasingly positive view of the prospects for most Asian markets last year.

All eight funds in the IMA Asia Pacific including Japan sector delivered returns higher than 29% over one year according to Morningstar

Japan's economic recovery has proved to be anaemic in 2009 and it is a great surprise the market has underperformed its Western counterparts and the Asian markets.

Legal & General Investment Management is shutting down its Japan equities hedge fund.

Over the course of the year, the Japanese stock market has continued to rise from its March low point, helped by a general improvement in investors' risk appetite and the release of more positive economic data.

Stock markets across Asia have rebounded strongly in 2009, outperforming the developed world, and the prospects continue to look encouraging.

While the rest of the developed world benefited from significant amounts of liquidity injected via Quantitative Easing (QE) programmes, Japan had a comparatively tight fiscal policy.

Twelve months ago, in the aftermath of the collapse of Lehman Brothers, it looked as though the liquidity crunch could bring down the world's financial system.

Aberdeen Asset Management's Hugh Young continues to be heavily underweight Japan, despite the country enjoying its fastest period of growth for over two years.