Valuations are back at enticing levels

ON JAPAN

Baillie Gifford's Donald Farquharson believes there are plenty of opportunities for the active investor in Japan.

Japan’s economy has recovered strongly and, though now slowing, is predicted to be one of the fastest-growing developed economies this year. Confidence is high and corporate profitability is back to pre-crisis levels in many industries. However, the market is only 20% above the post-crisis low – does this represent an investment opportunity or underline Japan’s unpopularity? Concern over Japan follows a few arguments and tends to centre on the persistence of growth. Japan may recover, but it relies heavily on the competitiveness of its exports and the yen has appreciated. Deflation, a...