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Skip Abenomics to find real gains, says Comgest outperformer

Skip Abenomics to find real gains, says Comgest outperformer

The overemphasis on Abenomics is blinding investors to the real opportunities in the Japanese equity market, according to Citywire + rated Céline Piquemal-Prade.

Speaking to Citywire Global, Piquemal-Prade said her team piled into Japan in the Comgest Monde fund well before Shinzo Abe returned to power.

Piquemal-Prade, who co-runs the fund with Comgest CIO Arnaud Cosserat, Citywire + rated Vincent Strauss and Laure Négiar, has a 16 percentage point overweight to the country in the €319 million fund.

‘This stance has nothing to do Abenomics, as we started buying back in 2011 following the tsunami. This was designed to take advantage of the fact that the financial community is not as present in Japan as other markets,’ she said.

‘For example, only 60% of the market is covered by analysts compared to 96% in most other developed markets, which provides ample opportunity to get on the ground and uncover strong and often-overlooked companies.’

Piquemal-Prade previously discussed her emphasis on Japan with Citywire Global in November 2011 and said the team’s stance has not been impacted by Abe coming to power at the end of 2012.

‘Our allocation is largely driven by stock-picking, as we have looked at companies with unique, market-leading characteristics that happen to be headquartered in Tokyo, not groups which are being affected by Abenomics,’ Piquemal-Prade said.

‘Growth in the Japanese market at the start of 2015 has been driven by earnings. Around one-third of companies have beaten expectations by more than 10% and this has benefited the portfolio, as we hold names such as pharmaceutical group Fanuc.’

Piquemal-Prade named Fanuc and air conditioning company Daikin as two examples of Japan-based firms showing strong earnings and international growth.

A-shares access

Elsewhere in the fund, Piquemal-Prade and her team have opened up positions in the Chinese A-shares market through participatory-note certifications with local banks.

This has seen them add a position in luxury drinks brand Moutai, which has 70% market share in the high-end drinks sector and has weathered the recent clampdown on corruption and bribery imposed on Chinese officials.

‘It is essentially the Chinese Remy Cointreau and it is a leading light in the spirits market. It has come out strongly following a shake-up of the market and has benefited from organic growth of domestic demand among the rising middle class.’

The Comgest Monde fund returned 42.1% in US dollar terms over the three years to the end of January 2015. This is while its benchmark, the MSCI AC World TR EUR, rose 40.4% over the same timeframe.

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