Fund managers keep faith with Japan despite 'failure' of negative rates policy

Strengthening yen

Many UK fund managers are maintaining their conviction towards Japanese equities, despite three months of negative interest rates and a strengthening yen significantly impacting sentiment towards the region year to date.

Earlier this month, a Bank of America Merrill Lynch survey revealed global fund managers had moved underweight Japanese equities for the first time since December 2012 in March, following the Bank of Japan's (BoJ) decision to cut rates to -0.1% in January. It made the move in a bid to break the country's "deflationary mindset", according to BoJ governor Haruhiko Kuroda, and boost loan demand. However, last month it was revealed loan growth had slowed to its weakest pace in three years. Meanwhile, the turmoil in global markets at the beginning of the year has seen the safe-haven yen ri...