INDUSTRY voice: Many companies are mispriced because they are misunderstood. Find out how a disciplined valuation approach is uncovering opportunity in overlooked areas of corporate Japan.
This year has been characterized by very large swings in market sentiment for Japan equities. Increasing market volatility has coincided with short-term news linked to both comfort with and concern for the global cycle.
Investors focused on the ever changing daily macroeconomic news have found it a big challenge to use this, often contradictory, information to inform their investment decisions. Amid such market uncertainty, investors have been chasing investment returns over shorter and shorter time frames, often leading to disappointing results.
The reason is that exuberance for popular market themes drive unrealistic return expectations and a total disregard of the starting price of an investment. In this environment, investors often overpay for perceived comfort, but overlook more attractively valued opportunities. So, the stand-out investment opportunities are found by going against the herd. This requires patience and a deep understanding of the drivers of trend earnings, but it also offers the greatest potential long-term rewards.
At Eastspring, we believe it is almost impossible to consistently forecast the effects of short-term news on markets. Forecasting relies on an ability to ‘time the market' in a world with an uncertain future. Instead, we actively avoid the economic news headlines. Share prices tell us how much the market is discounting the headlines. The cheaper the share price, the more the headline is discounted. So, rather than looking at headlines, we focus on starting price and company valuations, which are far more important to future shareholder returns.
Watch this video to find out about Eastspring's well-defined and disciplined approach to identify opportunities in Japan and how our team is delivering strong, longer-term performance by doing things differently from the broader market.
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