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Bumper year, more to come?

Fidelity Japanese Values (FJV) provided very strong absolute returns during 2017. It benefited from a rising Japanese stock market and from the strong gains in mid/small cap growth stocks. Stock selection was the key driver of performance with FJV’s holdings in services, retail trader and foods being key contributors. Despite this strong performance, FJV’s manager is positive on the outlook. Loose monetary policy and better economic growth are contributing to a gradual, and much-needed, pick-up in inflation. Corporate profits and margins are at record highs, and the manager sees room for further improvement driven by strong domestic fundamentals and a favourable global outlook. He adds that, while the labour market is tight, capex is at record levels, reflecting investments in improving efficiency.