Asian Takeaways: Kobe Beef

Nov 27, 2024

We’re proud to present the latest in our ‘Asian takeaways’ series, where we share local insights on what’s happening across Asia-Pacific. From India to Indonesia, from Taiwan to Thailand, we give our views on the dynamic changes across the region, while showcasing our learnings from being ‘on the ground’ at company and site visits.

After a recent research trip to Japan, we were reminded of the remarkable innovation occurring across Japanese businesses. Whether its in sports footwear, theme parks, or breakthroughs in nuclear fusion technology, we identified several examples of corporate advances that showcase how Japan is embracing the future and offers exciting prospects for investors.

The last few months have seen an intriguing political and market backdrop. When the Nikkei fell over 20% during three days in August, the media implied the end of the Japanese equity rally, calling the 5th August ‘Black Monday’. We attributed this drop to Bank of Japan Governor Kazuo Ueda’s more hawkish-than-expected comments post-rate hike, excessive concern regarding the U.S.’s hard landing scenario, and accumulated carry trade positioning. However, as all three concerns unwound, the Nikkei finished the month slightly positive and has continued to rise, albeit with continued volatility.

While there have been some recent political developments this fall, we believe they should not matter too much to the Japanese economy nor the BoJ in our opinion. Wage growth remains upbeat and is structurally underpinned by a labour shortage.

In our full piece, we discuss:

  • The theme of “imagineering,” or the combination of creativity and technology, within the retail sector at companies including ASICS and the entertainment industry as seen at Fantasy Springs.
  • Japan’s embrace of digitalisation, with the Japanese government promoting investment in the information technology sector to offset a labour shortage.
  • Our meetings with tech companies including SAKURA Internet, DISCO and Fujikura, all showcasing advanced technologies and impressive competitive advantages.
  • An increase in the popularity of nuclear fusion technology, caused mainly by a steep hike in global energy prices due to geopolitical events.

What is clear from our travels is that it feels as though change is underway and that wider Japan is looking to the future. As bottom-up stock pickers, we believe the country has much to offer, and we expect investor interest in Japan to grow as companies continue to innovate.

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