- Let's talk a little bit more about Japan,
since we've covered a little bit of Europe and the U.S.
How do you feel about the outlook longer term?
What's the right way to think about Japan?
- When I started managing money in international equities,
there was a great tradition. You were either
invested in Japan, or you were out of Japan.
It was very much a decision that was
driven by the attractiveness of the
cyclicality of Japan as an entire market.
Things have dramatically changed,
and they've changed for two reasons.
One is because after the better part of 20 years
of very poor demographics, a really challenging
price situation -- it was not just inflation or deflation,
but the whole infrastructure of price formation
being very challenged, a compression
of price, if you will, in the system --
Japan has had to reinvent itself. And companies
have really bifurcated between companies
that get it, and reinvented themselves,
both from an intellectual property or
research and development point of view,
and companies that don't and have just really
dwindled into remaining just a local operator.
And so we've actually found a lot of
attractive companies in Japan.
They tend to really fall, as I said,
in a couple of categories. One, global franchises
that own a technology, for example.
So, that could be found in automation,
that can be found in some of the pharmaceutical companies,
that can be found in the gaming
companies, electronic gaming companies.
But it can also be found in discount retail.
So if you're the average consumer in Japan,
now you're so used to that price deflation,
that you're constantly thinking
about something cheaper tomorrow.
Often we refer to the U.S. as "everyday low price,"
so you find very big discount retail.
So whether it be in furniture, in electronics,
these kind of companies do extremely well.
Internet -- so everything related to electronic platform
with very good logistics or
access -- has been booming. So companies
like SoftBank are good examples of that.
And then lastly, I think it's important
to understand that in Japan,
there is such a need for
a social harmonization that
medical providers and medical care
systems have been very attractive areas.
Now, what does that leave out?
That leaves out some of the financial companies,
which need the inflation to come back.
That leaves out some of the more traditional retailers,
and traditional department stores.
That also leaves out some of the
real estate conglomerates that exist.
And in that part, I think you need
so much macro help that, for now at least,
we remain a little bit skeptical.
- Are you finding opportunities in
firms that are based in Japan, but are really global?
Or is it also companies that where their
revenues and profits are basically in Japan? Is it both?
- I think the attractiveness of Japanese companies are
very, are really idiosyncratic, so it's almost case by case,
even more so than a lot of other places in the world.
It's really important to look at each of the companies.
So there used to be a great series of conglomerates
in Japan that were global companies selling to everybody,
but those really haven't evolved that well.
The Mitsubishi Heavys, the IHIs, as examples.
But if you actually look at the companies
that have been able to increase their R&D
and increase their intellectual property,
they've really become global players.
So Keihin, Murata,
Nidec -- all these are very traditional Japanese companies
that have become global, not just in
their mentality and the way they're run,
but in the kind of products they deliver to the end markets.
China has been a big destination of Japanese know-how,
but it's also gone into technologies
in Taiwan, in the U.S.: semiconductor technology,
auto technology -- everything that has to do with
very high intellectual property components.
And those kind of companies are actually
trading at a premium and trading at a valuation
that is much higher than the Japanese market.
So the market has recognized the
quality and the value of these companies.
For more infomation >> ケーブル編み(縄編み)のマフラー：右上2目交差【棒針編み】編み図・字幕解説 Cable Knitting Scarf / Crochet and Knitting Japan - Duration: 23:18. 
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