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Opalesque Exclusive: Japan hedge fund maintains cautious stance and gains 2.76% as Topix declines -1.6% Benedicte Gravrand, Geneva: Kuromatsu Fund USD class gained 2.76% and the JPY class 2.63% in February compared to a 1.6% decline in Topix. The USD class has gained 2.61% year to date versus a 10.26% decline in Topix.

… In Japan, there was much positive buzz about high cash levels in portfolios, potential for sovereign wealth fund buying, and underweight global long investors reconsidering Japan. The search for “diversifying assets” led to justification of high valuations for “cyber” stocks. There was also much promotion of any area with the potential for product price rises, notably steel and food, regardless of the profit consequences of rising input costs. … The managers remain highly negative on the whole semiconductor space. The managers still note little willingness on the sell side to adjust down FY08 profit estimates despite a worsening global and domestic economic situation, rising input costs and a significant move up in the yen. The managers thus expect considerable negative earnings revisions after companies reveal what we expect to be very conservative forecasts after 3/08 results.

“Kuromatsu Fund has achieved a positive return year to date despite a substantial fall in the market indices,” said the fund manager Peter Nicholas in a communication to Opalesque. “The major contributors to......................

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