Japan new safe haven for UOB funds

“Japan’s economy is recovering continuously, where the labour market has improved thanks to Abenomics. Domestic consumption is expected to continue to recover,” said Siripun Sutharoj, senior director UOBAM’s investment division.

Quantitative-easing (QE) measures are expected to stay for some time, as Japan’s inflation is still below the government’s target of 2 per cent. 

Natcha Suntorntarawong, executive director of UOBAM’s business development senior division, noted that real-estate prices in Japan were relatively low now compared with those in other developed countries. The prices in Singapore, in particular, are four times as high as Japan’s. 

“The current Japanese government has successfully implemented its fiscal and monetary stimulus policies,” she said.

Meanwhile, the continuation of the QE measures would be positive for Japanese companies, as evidenced by the recent increases in their earnings per share. 

“We expect this trend to continue in the next two to three years, and you can see this closer to home, where Japanese’s electronic products are gaining back their competitiveness here in term of prices and technology,” she said.

More equity investment is expected, thanks to the QE measures as well as REIT investment. Vacancy rates are shrinking and rents are rising. Furthermore, the Tokyo 2020 Olympic Games should boost demand in the capital. Historically, cities that have hosted the Olympics experienced a 30-50-per-cent increase in property prices on average, she said. 

In Tokyo, prices have risen by 8.9 per cent since the city was named the host city for the 2020 Games. Natcha also expects increases in nearby cities, including Nagoya and Osaka.

Siripun said Japan’s market would offer attractive returns to Thai investors, at a time when the Stock Exchange of Thailand is experiencing high volatility. Volatility is expected to continue despite the government’s latest economic stimulus package as the measures will mainly benefit construction and communication stocks. Meanwhile, the third-quarter results will indicate whether large-cap stocks will see a rebound in earnings this year. 

In the next three to six months, UOB Asset Management (Thailand) anticipates the SET Index to move up and down between 1,300 and 1,400 points. The index could be around 1,450 by the end of next year, with a price-to-earnings ratio of around 13.5 times. 

“UOB in Singapore has maintained a neutral view on Thai assets when compared with others in the region, and UOBAM shares that view. After the US interest rate is hiked, the sentiment could be more positive and the [government] mega-projects should boost the economy next year,” she said.