Following the large rise in the stock market over the last six months many markets are now pricing in a V shaped recovery, leaving little room for disappointment.  Finding value has become a more difficult task. With international diversification increasingly important for the private investor, we have decided to look abroad for the next opportunity.

As far as value is concerned Japan has ticked all the right boxes with the Nikkei’s price to book value by far the cheapest of the world’s largest stock markets. With a sound banking system only marginally affected by the credit crunch, Japan’s companies are well positioned to fill the vacuum which has been created by deleveraging Western economies. On top of that, a change in government (the first in over 50 years) is making investors sit up and take notice. There are indeed previous examples where the promise of reform spurred international investors to overweight Japan. This proved to be a catalyst for a sustained rally.