Japan: positive outlook despite recent GDP woes
We have recently been adding to our Japanese equity exposure across our asset models, with the caveat that such exposure has the currency risk removed.
Despite the surprise news that Japan is back in recession, we believe the outlook for the region remains strong, and the poor GDP data will simply make the Prime Minster, Shinzo Abe, even more determined to push through reforms aimed at stimulating the economy back to solid, sustainable growth. Equity markets are forward looking, and have already mostly recovered from the shock of the technical recession. Whilst the outlook is not without a fair amount of risk, we reiterate our positive stance on hedged Japanese equity exposure.