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Miton’s Jane loses faith in Japan

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The multi asset fund manager Miton has cut its exposure to Japanese equities to its lowest level since Shinzo Abe began his ‘Abenomics’ economic reform programme at the end of 2012 after being elected prime minister.

In the years since Japan has been a high conviction call in the Miton multi asset funds, but manager David Jane is now much less confident on the prospects for Japanese companies.

Having started to reduce his position in autumn last year, he continued to cut his exposure at the start of the year and now has less invested in Japan than he did prior to Abe being elected.

“Changing a previously held view must be a feature of our process if we are to preserve capital,” Jane says.

A  combination of a strengthening currency (which hurts the Japanese export companies), market turmoil in China (China is Japan’s biggest trading partner), and a lack of faith in Abe’s reform programme are the reasons for the change in approach.

Jane says: “The reform agenda still remains the in talk, but in reality it seems to have been a political and nationalistic agenda to retain power than any sincere intention to confront the vested interests that dominate Japanese business and politics.

“The evidence of the lack of true commitment to reform has been building for months, as Abe has prioritised rebuilding the military over the reform of the economy, and unusually this is leading to division in what is otherwise a very consensus-driven society.”

Indeed Jane says it is unlikely he will increase his fund’s holdings in Japan any time soon.

He says: “In conclusion, Japan for us is much less a macro call on Abenomics but a source of diversification, interesting thematic ideas and a potential source of insight into the effects of ageing on an economy. For these reasons it is for now likely to remain a much smaller position than most of recent history.”