Japan: a new dawn for growth investing

Short Briefings on Long Term Thinking - Baillie Gifford

Japan: a new dawn for growth investing

November 08, 2023

Is the time ripe for Japanese growth stocks? Donald Farquharson is Baillie Gifford’s head of Japanese equities and knows the market better than most. In the latest episode of Short Briefings on Long Term Thinking he draws on a recent visit to the country to explain why conditions seem favourable for a cohort of domestic companies with long-term mindsets.

Background

There’s a sense of renewed confidence and enthusiasm in the air in Japan. The country is home to the world’s second-largest market for equities after the US, but it doesn’t get a corresponding degree of attention from international investors.

The reason is partly because of the nation’s past weak economic performance. But a recovery is underway, and critically, many of its growth stocks have strong balance sheets, big ambitions and a positive story to tell.

In this episode, Baillie Gifford partner Donald Farquharson draws on his experience of investing in Japan since 1990 to explain why he’s particularly optimistic about the opportunities ahead for a select group of companies. They include the medical equipment maker Olympus, the car components manufacturer DENSO and the takeover advisory service Nihon M&A Center.

He also shares why he thinks some misunderstand Japan and why it’s no coincidence that many of the companies he backs are founder-run.

Resources:

Discovering the unsung superstars of Japanese technology

From Yahoo! to Z Holdings: the evolution of an online pioneer

Japan: the small businesses with big opportunities

Investing in Japan: distance lends perspective

Donald Farquharson’s LinkedIn page

Aiming High: Masayoshi Son, Softbank Group and Disrupting Silicon Valley

Past podcasts

Timecodes:

00.00 Introduction

01:40 Investing in Japan in the 1990s