Japanese Equities: An Opportunity 25 Years in the Making - With Peter Tasker and Mark Pearson, Co-Founders of Arcus Investment

In 1989, Japan represented 43% of the world’s stock markets. The eight largest banks in the world were Japanese, as were 7 of the world’s top 10 corporations. 10 years later not a single Japanese company made it into the top 10.

After an epic bubble and even more epic bust, today, 34 years later, Japan is the world’s 3rd largest economy, the world’s largest creditor nation, the second largest stock market globally, has the most undervalued currency of the major economies, and has the highest debt to GDP ratio of any G7 nation.

In this conversation, Peter and Mark, Co-Founders of Arcus Investment, explain the changed landscape, politically, economically, and from an investment perspective.

The discussion begins with an overview of Arcus’s approach to investing after 25+ years managing approximately $2bn in AUM, as well as their value bias, what excites them, and an overview of the key macro forces shaping the world’s third largest economy.

They reference that almost half of TOPIX trades below book and 40% of companies have no material research. They share their ‘bread and butter’ process of recycling the profits of appreciating stocks into undervalued firms (inspired by Buffett).

They speak about structural tailwinds, shifting allocations to equities, TSE reforms to “shame” companies resistant to change, the relatively cheap yen, and where they are identifying value and investing.

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