It was interesting to read the comments from Stephen Harker, fund manager of GLG Japan CoreAlpha, today in Investment Week.
Harker was commenting on the outlook for Japan following news of a third earthquake in the region.
He is at odds with other Japan fund managers, remaining cautious about the outlook for the region. He explains that the disasters in Japan are likely to result in higher taxes in the country, to support those displaced by recent events.
Harker also talks about the spare housing capacity in Japan which is likely to dampen demand for the construction of new housing; a key driver behind renewed economic growth.
Despite the crisis, Harker remains fully invested in Japan.
This is what we would hope to see from a fund manager in this region, as it enables us to make asset allocation decisions for our clients, with the fund manager delivering investments within that asset class.
In our recent Investment Outlook report, looking at our House View for the second quarter of the year, we decided to remain underweight in Japan.
We commented that, whilst some shrewd investors have used recent events in Japan as a ‘buying opportunity’, we believe the outlook for Japan is too uncertain to risk exposing additional investor cash at this time.
Having an underweight House View for a region does not necessarily mean no allocation, but a reduced allocation compared to the strategic position for a given investment risk profile.
You can download our latest Investment Outlook report here.
Photo credit: Flickr/Marc Veraart
