But from his fund manager’s point of view, throughout this period there have been some very interesting companies to invest in – some of them very successful.
“The economics and the politics has often been a bit disappointing, but within that there have always been some world-beating and exciting businesses to invest in. I think that is what has kept me sane.”
So, having run the Schroders Tokyo Fund since 2005, it is perhaps surprising the company in Rose’s portfolio that has performed the best is not one most people, indeed most fund managers, will have heard of – a small architectural paint business based in Osaka called SK Kaken.
“The company has a very good track record and has always appeared undervalued but very liquid and not widely researched. I’ve had interest in that for a long time. It has not always been a smooth ride but the business results have generally been growing stably, without much volatility. Recently, the share price has done fairly well.”
Although well run, the business’s understanding of shareholders is still somewhat lacking, he says, pointing out that it has quite a lot of cash on the balance sheet and low dividend payouts. “We visit the business and discuss that, but the company has an octogenarian president, Minoru Fujii, who is reluctant to change. At some point there will be change, but that will be the next upside for the business.”
Abe in arms
Japan’s Abenomics project kicked in at the beginning of 2013 (the economic policies of prime minister Shinzo Abe following his re-election in 2012) and there was a honeymoon period when the stock market was strong. “The yen was quite a lot weaker and it appeared we were getting some achievements in terms of ending deflation; the economy was growing,” says Rose.
Almost three and a half years old, is Abenomics working? “The answer is, partially,” he says. Specific achievements to date include some nominal GDP growth, which was not there before, some inflation returning, though not as much as the 2% target the government wanted, and record-high corporate profits.
However, the whole project has been made tougher for two reasons: one being that the domestic economic performance has been disappointing, especially since VAT was increased from 5% to 8% in 2014.
