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Investment Line: Japan Update - April 2019

Investment Line: Japan Update - April 2019

Investment Line is a regular investment bulletin produced by Mattioli Woods plc. The communication provides an update on funds, highlights some of the areas we are focusing on, and shares our thoughts on the issues of the day.

JAPAN

On 30 April, Japan’s 85-year-old Emperor Akihito will abdicate the throne in favour of his 59-year-old son Crown Prince Naruhito. Such an abdication is very rare – the last one took place in 1817, while a special law was passed in 2017 to allow the emperor – who has said he is “worried it may become difficult for me to carry out my duties” due to old age and worsening health – to do so.

Emperor Akihito has been on the throne since 1989 and the climax of his reign will result in the end of the current era, called ‘Heisei’, and the start of a new era, called ‘Reiwa’ (meaning order/good and harmony) on 1 May. The imperial transition has been timed to coincide with ‘Golden Week’, which contains several Japanese bank holidays. This year, it has been extended to ten days to celebrate – this means the Tokyo Stock Exchange will be closed from 29 April to 6 May, with no trading of Japanese-listed assets occurring during this period.

For clients invested in the Mattioli Woods Multi-Asset Funds, it’s business as usual in respect of any new investment or withdrawals. For clients in directly invested portfolios that hold individual Japanese funds, dealing and access to the funds will be limited or in some cases unavailable from 29 April to 6 May. Normal service will resume on 7 May – if you have concerns about the access to your Japanese assets in this period, please contact us. While the temporary closure of the exchange can be frustrating, we don’t foresee any major issues with the assets themselves, apart from a likely increase in volatility when it first reopens. Having said that, trading on the yen will continue and due to the holiday, liquidity in the currency could be lower than usual and lead to more volatile movements (despite the actual asset prices not moving). We have discussed and considered the implications of the temporary closure and we are comfortable in holding the Japanese assets over this period. 


Investment Line is written and edited by members of the Mattioli Woods Group investment committee and is for information purposes. It is not intended to be an invitation to buy, or act upon the comments made, and all/any investment decisions should be taken with advice, given appropriate knowledge of the investor’s circumstances. The value of investments and the income from them can go down as well as up, and you may not get back the amount invested. Past performance is not a guide to future returns.

Mattioli Woods plc is authorised and regulated by the Financial Conduct Authority.