Why Japan’s stock-market comeback is good for Fidelity’s Eileen Dibb

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Fund manager says she sees a tailwind behind Japanese stocks, and likes chipmakers Taiwan Semiconductor Manufacturing and Samsung Electronics

When Eileen Dibb took Japanese studies and international relations at university in the 1980s, the land of the rising sun was in an economic bubble that would eventually burst. As a fund manager, she’s been navigating a Japanese stock market struggling to regain its 1989 record high and a Chinese market rattled in recent times by Beijing’s big-tech regulatory crackdown. Despite market volatility and uncertainty, her $146.

We have passed the 1989 bubble period and now have a normalized market with reasonable valuations. I am positive on Japan and on changes to its corporate sector over the past decade. That stems from former prime minister Shinzo Abe’s monetary, fiscal and economic growth policies. Corporations have become more innovative and have better corporate governance. There is also a new Tokyo Stock Exchange policy where companies whose stocks trade below book value must figure out how to get above that.

Buffett has certainly helped the equity rally. When you buy into Japanese trading companies, you’re getting a large swath of the overall economy. They are generally well-diversified entities and have had pretty good valuations, too.I’ve been overweight banks such as Mitsubishi UFJ Financial Group. We’ve had a loosening of Japan’s yield-curve control policy this year that will give the government more flexibility to potentially tighten monetary policy.

 

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