Tokyo, Japan – The Japanese equity markets saw a rise in the first quarter of 2024, with a focus on large-cap companies, semiconductor-related firms, exporters, and low-quality stocks. The Bank of Japan’s decision to enact its first rate hike since 2007 and exit negative interest rate territory marked a significant step towards normalizing the country’s monetary policies. Analysts believe that the ultra-accommodative stance adopted by the Bank of Japan in the past may not be sustainable in the long term, affecting holdings in financial companies like Sumitomo Mitsui Financial Group (SMFG) and Sumitomo Mitsui Trust.

The yen experienced a decline in value against the U.S. dollar during the quarter, reaching around 151 USD/JPY. This fluctuation in currency exchange rates can impact various sectors of the economy, especially those with significant exposure to international trade.

In terms of portfolio performance, the reported return was 3.01% for the period, compared to the MSCI Japan Index which returned 11.01%. The top contributors to the portfolio included Toyota Motor, Sumitomo Mitsui Financial, and Sumitomo Mitsui Trust, with each company demonstrating positive performance during the quarter.

On the other hand, companies like OMRON, TechnoPro Holdings, and Cosmos Pharmaceutical faced challenges during the quarter, causing a negative impact on the portfolio. Despite these detractors, analysts remain optimistic about the long-term prospects of these companies and continue to monitor their performance closely.

The portfolio was strategically positioned with investments in companies like Bunka Shutter and NIFCO, both offering unique opportunities for growth and value creation. By carefully selecting and diversifying investments, the portfolio aimed to capitalize on undervalued assets and companies with strong growth potential.

Looking ahead, analysts remain focused on conducting thorough fundamental analysis at the company level to identify investment opportunities that align with their strategy. By investing in businesses with significant growth potential and strong management teams, the portfolio aims to achieve sustainable long-term success amidst changing market dynamics and economic conditions.

Overall, the outlook for the portfolio remains positive as analysts continue to prioritize value-driven investment decisions and maintain a diversified portfolio to mitigate risks and maximize returns. As the market evolves, the portfolio will adapt to capture emerging opportunities and deliver optimal results for investors.