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An update from our investment manager, Chern-Yeh Kwok - 6 November 2020
Japanese equities fell during the month of October, as the market was weighed down by concerns of rising COVID-19 infections across the world, and halting progress by the U.S. government for further stimulus measures. But similar to earlier in the year, the Japanese market was more resilient compared to other major markets. Small caps marginally outperformed large caps; the yen strengthened against most major currencies.
Corporates kicked off the reporting of September-end quarterly earnings, and thus far, results have been largely favorable. If the prior quarter was characterized by restraint, repositioning and prudent cost control, the end September quarter suggests that many of our holdings are undergoing noticeable recoveries, despite operating under still-difficult conditions. This set of results also reaffirmed our view that early prognosis of the pandemic’s impact on Japanese corporates were much harsher than reality. With conditions normalizing for some corporates, share buybacks have started making a comeback, notably for healthcare and telecommunications companies. Dividends at the majority of our holdings have remained at similar levels as a year ago.
Nitori Holdings launched a hostile offer to acquire hardware-store operator Shimachu Co., topping a previous proposal from fellow retailer DCM Holdings Co. A successful takeover will allow Nitori to expand in the Tokyo metropolitan area, but this bid is more notable for Nitori’s approach. Hostile takeovers in Japan have largely been taboo and difficult to execute, due to cross shareholdings and weak governance in corporate boardrooms, as well as a general distaste for such corporate activity exhibited by policymakers and the media. While these bids have generally not succeeded, their increasing number in the last year has tested the resolve of corporates in embracing corporate governance. Among the more notable bids was Hoya Corp.’s offer for semiconductor production equipment manufacturer NuFlare Technology in Dec 2019, which was firmly rebuffed by NuFlare’s board; instead, the board recommended a lower bid from NuFlare’s majority shareholder Toshiba Corp. We are shareholders of Nitori Holdings and Hoya Corp.
Japan is home to world-class companies with strong franchises that can play an essential role in any diversified portfolio seeking to deliver long-term growth.
Chern-Yeh Kwok is head of Japanese equities having transferred from the Singapore team in January 2011. Chern-Yeh joined Aberdeen Standard Investments (Asia) in 2005 from MSCI Barra where he was an equity research analyst.
Chern-Yeh graduated with a BA in Journalism from the University of Missouri- Columbia and holds an MSc in Finance from the London Business School.
Hisashi Arakawa joined Aberdeen Standard Investments (Asia) in 2016 and is based in the Tokyo office. He has a MPhys in Physics from the University of Oxford and a MBA from INSEAD and is a CFA® charterholder. He was previously vice president in the corporate banking group of Development Bank of Japan.
Flavia Cheong is Head of Asia Pacific ex Japan Equity on the Asian Equities team, where, as well as sharing responsibility for company research, she oversees regional portfolio construction. Before joining Aberdeen Standard Investments (Asia) in 1996, she was an economist with the Investment Company of the People’s Republic of China, and earlier with the Development Bank of Singapore. Flavia graduated with a BA in Economics and an MA (Hons) in Economics from the University of Auckland. She is a CFA charterholder.
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute
Head of Investment Management, Japan
Chern-Yeh Kwok is head of Japanese equities having transferred from the Singapore team in January 2011. Chern-Yeh joined Aberdeen Standard Investments (Asia) in 2005 from MSCI Barra where he was an equity research analyst.
Chern-Yeh graduated with a BA in Journalism from the University of Missouri- Columbia and holds an MSc in Finance from the London Business School.
Deputy Head of Investment Management, Japan
Hisashi Arakawa joined Aberdeen Standard Investments (Asia) in 2016 and is based in the Tokyo office. He has a MPhys in Physics from the University of Oxford and a MBA from INSEAD and is a CFA® charterholder. He was previously vice president in the corporate banking group of Development Bank of Japan.
Head of Equities - Asia Pacific ex Japan
Flavia Cheong is Head of Asia Pacific ex Japan Equity on the Asian Equities team, where, as well as sharing responsibility for company research, she oversees regional portfolio construction. Before joining Aberdeen Standard Investments (Asia) in 1996, she was an economist with the Investment Company of the People’s Republic of China, and earlier with the Development Bank of Singapore. Flavia graduated with a BA in Economics and an MA (Hons) in Economics from the University of Auckland. She is a CFA charterholder.
CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute
Karen Brade was appointed a director on 1 May 2013 and assumed the Chair in July 2018. She has over 25 years of investment experience in a range of sectors and markets. She began her career at Citibank, working on various multi-national project finance transactions. Between 1994 and 2004 she was an investment principal at CDC Group plc (the UK Government’s Development Finance Institution) where she directed equity and debt investing, portfolio management, fund raising and investor development including India, South Asia, Africa and China. Since 2005 she has been an adviser to hedge funds, family offices and private equity houses and is currently the Audit Committee Chairman of Augmentum Fintech and Chairman of Keystone Investment Trust.
Sam Dean was appointed a director on 1 December 2020. He has a long career in investment banking, working in Equity Capital Markets and corporate finance on behalf of corporate and government clients globally. After starting his career in 1993 at Kleinwort Benson, he subsequently worked as a Managing Director at Citibank (1998-2001), Deutsche Bank (2001-2009), and Barclays (2009-2017). At Deutsche and Barclays, he held senior management positions as Global Head of Equity Capital Markets and Head of Corporate Finance, whilst continuing to work on client transactions.
Chairman and Independent Non-Executive Director
Karen Brade was appointed a director on 1 May 2013 and assumed the Chair in July 2018. She has over 25 years of investment experience in a range of sectors and markets. She began her career at Citibank, working on various multi-national project finance transactions. Between 1994 and 2004 she was an investment principal at CDC Group plc (the UK Government’s Development Finance Institution) where she directed equity and debt investing, portfolio management, fund raising and investor development including India, South Asia, Africa and China. Since 2005 she has been an adviser to hedge funds, family offices and private equity houses and is currently the Audit Committee Chairman of Augmentum Fintech and Chairman of Keystone Investment Trust.
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Sam Dean was appointed a director on 1 December 2020. He has a long career in investment banking, working in Equity Capital Markets and corporate finance on behalf of corporate and government clients globally. After starting his career in 1993 at Kleinwort Benson, he subsequently worked as a Managing Director at Citibank (1998-2001), Deutsche Bank (2001-2009), and Barclays (2009-2017). At Deutsche and Barclays, he held senior management positions as Global Head of Equity Capital Markets and Head of Corporate Finance, whilst continuing to work on client transactions.
| Year End | 31 March |
| Accounts Published | June |
| Annual General Meeting | July |
| Dividend Paid | July, December |