Whether the strength of cyclical and value stocks in 2016-17 has been derived from general global economic buoyancy or the narrower dynamic of the 'Trump trade', recent signs suggest that this general exuberance may be waning.
Growth stocks in Japan, particularly small- and mid-cap issues, have been relative underperformers in recent market conditions, despite many having strong fundamentals and earnings momentum and, if the broader rally is indeed fading, this alone should make them attractive. The case for a pendulum shift from value back to quality and growth is further strengthened by an important secular trend in corporate behaviour. Long a laggard in the areas of governance and stewardship, Japan is now catching up with best practice and could even emerge as a global exemplar. What is the best hed...
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