Deflation Begins Exit from Japan: How Will Easier Money Affect Japanese Securities in 2013? An Expert Portfolio Manager Specializes in Japan and Shares His Top Stock Picks

Wall Street Transcript

67 WALL STREET, New York - June 21, 2013 - The Wall Street Transcript has just published its Investing in Asia Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investing in Asia - Longer-Term Investing - Asia Pacific Investment Theses - Investing in China - Equity Investing Strategies - China's Domestic Markets - Undervalued Asian Companies

Companies include: Japanese equities.

In the following excerpt from the Investing in Asia Report, an expert portfolio manager discusses his portfolio-construction strategy and his investment philosophy for Japanese equities:

TWST: Would you give us two or three examples of your top holdings and tell us what you like about each stock, why you chose it for this fund?

Mr. Ozawa: The first one of my preference is the real estate property company, the name is Mitsubishi Estate (TYO:8802), which is one of the largest property companies in Japan. And Mitsubishi Estate has a number of big buildings in Tokyo's central district. So the property company must be a big beneficiary in this turning point, deflation to inflation, and BOJ's large quantitative easing. So the quantitative easing will lead to asset price increase, and asset price increase that causes a remarkable effect. And that's the key for Japan to exit from deflation. So we think as long as we are in a deflationary state, the BOJ will continue the QE, and then asset prices are finally going up. So Mitsubishi Estate is one of the biggest beneficiaries from that change.

The second largest one is Mitsubishi Heavy Industries (TYO:7011). We like this infrastructure-oriented company because in Japan we need to renew infrastructure and also given the trouble in Fukushima Daiichi Nuclear Power Plant, we have to renew our electric power plants. And also outside of Japan, particularly in the Asia Pacific region, their economy has been growing rapidly. They need more infrastructure, including electric power plants, roads and railways. So there are a lot of needs there, and that will provide tremendous opportunities for the infrastructure provider. So Mitsubishi Heavy Industries is a machinery company, and they provide extremely competitive energy efficient turbines for power plants, and I think the Mitsubishi Heavy Industries is one of the big beneficiaries. So are Toshiba (TYO:6502) and Hitachi (TYO:6501), so we like those companies as well.

TWST: What is your sell discipline?

Mr. Ozawa: We are a long-term investor, so we bet on a company's long-term growth and valuation. Overall, our sell discipline is if the company's valuation is becoming expensive compared to our expectation or our long-term growth forecast. So recently, we sold a couple of electric appliance companies in Japan. Unfortunately, over the past five years, due to...

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