Aberdeen Japan Investment Trust comfortably outperformed its benchmark during a period of volatility affected by the US-China trade spat.
The Aberdeen Standard Investments company gave a share price return of 16.4% and asset value return of 13.1% compared with the Topix Index Total Return of 9.3%.
In its interim results for the six months to 30 September 2019, chair Karen Brade warned that investors are not yet out of the woods due to the unpredictability of Donald Trump.
She said the US president’s statements could easily derail attempts to broker a truce with China.
Brade said: “The Japanese stock market will continue to face the same litany of risks that it has done over the past half year. At the forefront is the protracted trade negotiations between the world’s two largest economies and the unpredictability of the messages on these and other issues emerging from the US President.
“Also affecting share prices are the geopolitical uncertainties that compel investors to flood into the yen as a safe haven each time volatility spikes.”
Brade added that improving Japan-China relations, the possibility of a Japan-US agreement and impending resolution of Brexit gave cause for optimism.
Kwok Chern-Yeh, manager of Aberdeen Japan Investment Trust, cautioned that Japanese stocks aided by a a consumption tax hike may face a correction and that order book forecasts were negative.
But he added: “More importantly, your portfolio companies are not sitting still: Shiseido is expanding capacity for premium skincare products; Nippon Paint is making a significant foray into Australia; while Shin-Etsu Chemical’s new ethylene cracker will lower costs and reduce business risks.
“These individual actions come alongside a period of higher awareness of shareholder return: Japanese firms are returning record amounts of capital on pristine balance sheets through share buybacks or higher dividends.”
