JPMorgan Japan Small Cap growth & Income plc (LON:JSGI) has announced the ten largest investments in % of total assets as at 31 October 2023:
| Mitsubishi UFJ Lease & Finance | 2.8% |
| Nippon Sanso | 2.6% |
| MEC | 2.5% |
| OSAKA SODA | 2.4% |
| Biprogy Inc | 2.3% |
| Raito Kogyo | 2.3% |
| Sanwa | 2.3% |
| SANGETSU | 2.3% |
| Mitsui Chemicals | 2.2% |
| Nakanishi Inc. | 2.2% |
| Total | 23.8% |
Month in review
As of 30/09/2023
- The MSCI Japan Small Cap Index fell by 0.7% in Japanese yen terms, hurt by concerns about longer periods of higher interest rates in the US, which also weighed heavily on Japanese equities.
- The portfolio underperformed the benchmark over the month, with both stock selection and sector allocation detracting from performance.
- From a sector perspective, underweight positions in banks and overweight positions in semiconductors and semiconductor equipment detracted the most. Meanwhile overweights to financial services and underweights to transportation and equity real estate investment trusts contributed the most to performance.
- At the stock level, overweight positions in Capcom (gaming publisher) and Japan Material (semiconductor infrastructure services) detracted the most. Capcom’s share price fell as revenues from new launches were below market expectations. Share price of Japan Material fell due to weakness in the sector. However, over the medium term, the company is expected to be a beneficiary of the re-shoring of production to Japan with a high portion of recurring revenues as well as operating margins greater than high teens.
- On the other hand, overweight positions in Mitsubishi HC Capital (leasing services) contributed the most to performance, as rate-sensitive stocks performed well. Overweight positions in Tri Chemical Laboratories (semiconductor chemicals) contributed, as the share price rose on expectations of bottoming out of revenues over the year, as well as news that its new Taiwanese plant is expected to be completed this year.
Looking ahead
As of 30/09/2023
- There has been an acceleration in improvements in corporate governance and balance sheet management this year. The structural changes in the corporate governance landscape are likely to have a long and strong duration, which has brought a strong tailwind for stock selectors who are identifying companies starting to change. Buybacks appear to be in favour, with the number of buybacks announced (totalling more than 6 trillion Japanese yen) hitting historical highs. Also, shareholder activism has started to be both accepted and successful. This domestic pressure, combined with activist funds, is a powerful combination and is by far the most important thing currently taking place in our view.
Japan income fund, JPMorgan Japan Small Cap Growth & Income (LON:JSGI), targets Japan income without compromising on Japanese growth opportunities. This Japan income investing opportunity gives investors access to a diverse and fast growing sector managed by local managers.
