Irrational price behaviour offers significant opportunities

M&G's Johan Du Preez

For keen observers of price, 2016 in Japan was an emotive journey - interest rates at zero, an episodic decline in financials in the first half of the year, large gyrations in the yen, and the election of US President Donald Trump - to name but a few.

Given the high levels of volatility observed in 2016, the MSCI Japan Index had a relatively lacklustre few months at the start of 2017. This was despite decent performance from companies during the most recent results season, which demonstrated improving profitability and an increasing willingness to return the resultant cashflow to shareholders. Combined with an attractive earnings yield of around 6%, the Japanese stockmarket compares favourably to other developed market equities. Should investors avoid Japan because of its weak economy? However, it still seems many investors b...