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B. G., Opalesque Geneva:

This has been a volatile summer so far in Japan. But a long/short equity fund survived the choppy waters of July through long positions in health care, financials and real estate - even if losses were made in IT, industrials, and consumer discretionary stocks.

A slight overreaction

The narrowing of the Japan-US interest rate differential has caused the yen to appreciate rapidly, and concerns about deteriorating corporate earnings in Japan have led to an increasing correction in the stock market, Sparx Asset Management's fund manager commented in a monthly report seen by Opalesque.

However, the manager sees this as a slight overreaction. They believe that the sensitivity of Japanese companies to foreign exchange rates has declined compared to the past, and even if the exchange rate were to remain at around 145 yen to the dollar from August onward, the negative impact on earnings for the current term would be only 1-2%. In fact, BOJ raising its policy interest rates earlier than the market forecast indicates that the Japanese economy is steadily transitioning to an inflationary economy, and the manager sees no change in the medium-term upward trend of Japanese stocks.

The fund's August positions are anticipated to be 60-90% long and 30-70% short, with a net position of 10-30%.

Volatile markets

In July 2024, the Nikkei Stock Average fell by 1.22% from the previous month. Initially, semiconductor-rela......................

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