Fidelity Japan Trust plc (LON:FJV) portfolio manager Nicholas Price shares his outlook for 2025 and provides an insight into how he is looking to position the portfolio against an evolving macro backdrop.
What is your outlook for your asset class?
Global markets reacted immediately to Donald Trump’s election victory and Japan was no exception, with key indices enjoying a lift. While the initial impact quickly faded, concerns over the pursuit of protections trade policies are set to linger. In this environment, I am looking towards domestic Japan-oriented mid caps that are generally inoculated from external macro risks, and beneficiaries of reshoring in the United States.
In Japan, monetary policy is on the path to normalisation and the annual spring labour negotiations are likely to deliver a further c.3% increase in base wages next year, a level that the Bank of Japan (BoJ) views as a requisite for sustainable inflation. Despite losing their Parliamentary majority, the Liberal Democratic Party and its junior partner Komeito are likely to cooperate with opposition parties on specific legislation, with a focus on economic stimulus and regional revitalisation ahead of Upper House elections in July 2025. Harsher-than-anticipated tariffs or some other exogenous shock leading to a sharp deceleration in global growth are potential risk factors ahead.
