Stock Picks | Japan - A Value Trap Or A Goldmine For Contrarian Investors?

14th Aug by Sheru The Vegan Westie

5 comments 460 reads

My international Stockopedia value/contrarian screen is now populated with 60% of Japanese stocks? :-)

Indeed I notice that the number of Japanese stocks appearing in my screen has been growing the past few months?

Anyone else dabble in this area? Or are you a strict UK only investor? :-)

Is Japan a value trap at the moment? (Yen carry trade unwind etc etc)

For anyone who is interested in buying Japanese stocks Interactive Brokers provides this service. You can buy these stocks in a self select ISA.

Incidentally, I also want to buy South Korean stocks from the UK in an ISA. Anyone recommend a good broker? Unfortunately Interactive Brokers do not appear to allow users to buy South Korean stocks :-(

BIG THANKS!

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About the Author

Sheru The Vegan Westie

Premium Member

Value Investor - follow me on Twitter: @sheruthewestie :-) https://youtube.com/@valueinvestingwithsheruthe5407

5 comments

Charles Mitchell

14th Aug

I use Investment trusts such as Nippon Active Value Fund (LON:NAVF) ,CC Japan Income and Growth Trust (LON:CCJI) for exposure to the Japanese stock market. There is more info here https://www.theaic.co.uk/aic/f... and for exposure to smaller companies https://www.theaic.co.uk/aic/f...

They are quite often discussed on the monthly Investment trust board. https://www.stockopedia.com/co...

There is an Investment trust that holds Koran Pref stocks Weiss Korea Opportunity Fund (LON:WKOF) .

Another option is using ETF's for exposure to Japan https://www.justetf.com/uk/sea...

Charles

BnB

15th Aug

You’ll struggle to buy Korean stocks directly. Access is limited to authorised investors. It’s not impossible to achieve authorisation, but a hassle, and you’ll need a very supportive broker - possibly not a retail platform.

qimotte

17th Aug

What are the top Japanese stocks that come up on your international Stockopedia value/contrarian screen , Sheru The Vegan Westie? Unfortunately, I haven't thought it worth the extra expense for anything beyond UK stocks, but I'm wondering now.

Sheru The Vegan Westie

18th Aug

Hello qimotte … so today, out of the 10 international stocks that are currently present on my value/contrarian screener … 6 of these are Japanese: Subaru (TYO:7270) , Mazda Motor (TYO:7261) , Toyo Tire (TYO:5105) , Tokai Rika Co (TYO:6995) , Toyoda Gosei Co (TYO:7282) , Toyota Boshoku (TYO:3116) … these 6 need further scrutiny before jumping in and buying ;-)

(Note I did jump in and buy some Tokai Rika Co (TYO:6995) a few days ago)

The other 4 stocks on my screener are Econocom SE (EBR:ECONB) , Signify NV (AMS:LIGHT) , S Enjoy Service Co (HKG:1755) , Martinrea International (TSE:MRE)

qimotte

19th Aug

Hello and thank you Sheru The Vegan Westie. Fascinating to see that all six Japanese stocks that you quote are in the automotive sector. In keeping with the contrarian mantra of the screener, Japanese automotive is probably my least favourite sector in Japan right now. I think there is still too much denial about the ability of the Chinese EVs to steal market share away from the Japanese in EMEA. Subaru might be the one stand out, however, as it has almost no market share outside Japan itself and the US which of the two markets probably best protected against the Chinese EV onslaught. Also, it's target customer is less likely to be an EV buyer.

My favourite two value/ contrarian stocks in Japan probably wouldn't appear on your screen as such but for what it is worth they are: 1) Eisai (TYO:4523) , 2) Softbank (TYO:9984)

Eisai was hit just days before the market fell off because Europe decided not to approve it's new wonder drug for slowing the progressive Alzheimer's. And then with the sort of happened, it was hit the second time, from which it hasn't recovered. I'm contrarian as I believe Europe got it wrong on the drug and will be forced to re-examine its decision in due course. In the meantime, sales in the US are picking up from a slow start so and in due course the market will see Europe was never going to be more than 10%-15% of sales and in the end will see the reaction has been overpriced in the confusion of last week.

Softbank simply because its being valued at an 80% discount to its share holdings. It's shareholding in ARM alone is worth more than the entire value of Softbank. And then just before the market rout Elliot took a size for sake in Softbank with the aim of the breaking up the company or getting it to commit to substantial share buybacks to raise PB.

I do appreciate that these don't quite fit quite into the typical value/ contrarian way of seeing things, but with context my view is certainly contrarian to that of the market now, and both are quite good value on standard measures although they might have more likely appeared in a growth/contrarian screener before.

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Japan - a value trap or a goldmine for contrarian investors?

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About the Author

Sheru The Vegan Westie

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