Shiozumi: Why investors should shrug off scepticism on Japan

Underperformed other developed markets

Hideo Shiozumi, manager of the Legg Mason IF Japan Equity fund, believes investors should dismiss sentiment concerns in Japan and increase exposure while confidence is lagging, particularly to domestically-focused areas.

Although Japan had a strong second quarter and favourable profit growth, the Nikkei index has lagged other developed stockmarkets more recently. This is combined with poor investor sentiment and a deflationary mindset among the population. Year-to-date, the Nikkei 225 has returned 2% versus returns of 3% by the FTSE 100 and 9% by the S&P 500 in the US. "We continue to believe the Japanese stockmarket is at the second stage of its long duration bull market," said Shiozumi (pictured). "While some scepticism exists about Japan's long-run recovery and exit from deflation, we believe in...