Reasons to be cheerful

”‹Fidelity Japanese Values (FJV) has recovered strongly this year as investors have refocused their attention on growth stocks (those that tend to increase in capital value). Japanese corporate earnings have recovered sharply from their low and while yen strengthening, on the back of regional political events, is a potential challenge, FJV’s manager says that an uptick in the global cycle has helped Japan to expand beyond its potential growth rate. The trust’s manager, Nicholas Price, observes that the trend of improving corporate governance continues (corporate governance is the system of rules and practices by which a company is managed, it needs to balance the interests of shareholders and other stakeholders) and he believes that this is driving shareholder returns to a record high. Nonetheless, with companies holding considerable cash, he believes returns still have room to grow from here and, in a climate of heightened concerns over valuations, Japan compares favourably with other developed markets. FJV’s 12.4% discount also offers some comfort.