JPMorgan Japan Smaller Companies Trust Plc. 15 July 2016

Transcription

1 JPMorgan Japan Smaller Companies Trust Plc 15 July 216

2 JPMorgan Japan Smaller Companies Trust Plc 12m performance to 31 March 216 % 215/16 214/15 213/14 212/13 211/12 Share Price 7.8% 35.9%.5% 24.5% 1.4% Net Asset Value* 12.2% 3.9% 3.6% 25.2%.5% Benchmark** 6.9% 22.4% -4.1% 17.2% 6.% Past performance is not necessarily a reliable indicator for current and future performance. Source: J.P. Morgan/Morningstar. The performance is calculated on mid-market price to mid-market price ex-dividend basis, income reinvested, excluding transaction costs. The Net Asset Value (NAV) Performance has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP. Please note Benchmark Indices do not include fees or operating expenses and are not available for actual investment. * Cum income only NAV with debt at par, diluted for treasury and/or subscription shares if applicable **Benchmark is S&P/Citigroup Japan Extended Market Index (Total Return Net)

3 JPMorgan Japan Smaller Companies Trust Plc Performance Summary As of 3 June % 26.4 JPMorgan Japan Smaller Companies Trust S&P Japan Small Cap (Net Dividends Reinvested) Year 2 Years 3 Years 5 Years 1 Year 2 Years* 3 Years* 5 Years* JPMorgan Japan Smaller Companies Trust S&P Japan Small Cap Excess Return (Geometric**) *Annualised returns - the average proportional out-performance or under-performance of a portfolio relative to the associated benchmark for each year of periods greater than one year. An annualised return provides only a snapshot of an investment's performance and does not give any indication of the fluctuations in the returns of the portfolio. ** Geometric excess returns - Geometric Excess Return measures the proportional out-performance or under-performance of a portfolio relative to the associated benchmark. It is the return of the portfolio divided by the return of the benchmark. Past performance is not necessarily a reliable indicator for current and future performance. Source: J.P. Morgan Asset Management /Morningstar. Performance data has been calculated on NAV to NAV basis, including ongoing charges and any applicable fees, with any income reinvested, in GBP. Please note Benchmark Indices do not include fees or operating expenses and are not available for actual investment.

4 Market Outlook

5 93c2a8132d9c4 Has Abenomics failed? Democratic Party of Japan (DPJ) vs Liberal Democratic Party (LDP) support rate* 6% LDP DPJ 5% 44% 4% 3% Abenomics progress: Abenomics has been successful in promoting Japan s corporate governance Abenomics has been successful in promoting Japanese tourism Wage has been gradually improving 2% 1% % 8% The national corporate tax rate has been moderately reduced Inflation target has not been met Sep '9 Mar '1 Aug '1 Feb '11 Sep '11 Mar '12 Sep '12 Feb '13 Jul '13 Jan '14 Jul '14 Dec '14 May '15 Oct '15 Apr '16 Labour reform and immigration policies have not progressed * Support rate is the political support rate counted based on the survey conducted by the Nikkei. Source: Nikkei, CLSA, J.P. Morgan Asset Management as of 3 June 216. * Refers to the economic policies advocated by Shinzō Abe since the December 212 general election, which elected Abe to his second term as Prime Minister of Japan.

6 93c2a8132d9c4 Corporate governance prioritised by the government Dividends and Buybacks* Buyback* announcement pace exceeds that of last year JPY trillion Share Buybacks Dividends Announced share buybacks* (aggregate value) 6 (JPY billion) % Sources: Nomura, based on company disclosures and Toyo Keizai data, J.P. Morgan Asset Management. The latest data point as at 31 May 216. * Share buyback is the re-acquisition by a company of its own stock, by literally buying its shares back from the marketplace which increase the per-share value of the company s stocks. - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sources: Goldman Sachs, Quick, J.P. Morgan Asset Management, as of 3 June 216

7 Portfolio themes

8 93c2a81225b3c Japan is an under-researched market Breakdown of number of analyst recommendations Japan * US * Europe * to 1 to 1 to 1 2 to 1 2 to 1 2 to *TOPIX (1934 companies) * US Russell 3 (37 companies) * S&P Europe BMI Index (1863 companies) In Japan, more than half of the market is covered by one or zero analysts. Sources: Bloomberg, J.P. Morgan Asset Management. The latest data available as at 3 June 216.

9 93c2a81225b3c Drug stores in Japan store sales are expanding, while operators are consolidating Retail market and drug store market growth JPY trillion Drugstore operators in Japan and in UK (JPY trillion) Drug store market (rhs) Total retail market (lhs) Source: Bank of America Merrill Lynch based on Home Center Institute, the latest data available as at 3 June 216. Number of drug store operators (JPY trillion) 5. In Japan, the drug store market is expanding while the size of overall retail market remains almost unchanged Japan top 1 drug store operators Others UK top 1 drug store operators L'Oréal Groupe GrandVision BV AEON Group Matsumotokiyoshi Holdings Nihon Chouzai Others Sugi Holdings Cosmos Pharmaceutical Corp Sundrug Cocokara Fine Cawachi Create Super Drugstore Ain Pharmaciez Group No. of companies 35 Number of drug store operators Day Lewis Plc Scottish Midland Cooperative Society Ltd Walgreens Boots Alliance (Boots) 3 25 Co-operative Group Ltd, The Specsavers Optical Group BV Numark Ltd Celesio AG Hutchison Whampoa (Superdrug) Meanwhile, the number of drug store operators is declining, and consolidation in the drug store industry in Japan is progressing. (Year) Source: Bank of America Merrill Lynch based on Home Center Institute, the latest data available as at 3 June 216. Souce: Euromonitor, Nomura Securities, the latest data available as at 3 June 216. Drug stores industry in Japan is still fragmented compared to other developed countries such as UK. Consolidation phase is likely to be at an early stage. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities.

10 Pet insurance industry is expanding in Japan as the population is aging Anicom Group has the no.1 market share in the pet insurance industry in Japan - 5,969 pet hospitals are affiliated with the company*. * Source: Anicom Group, the latest data available as at 3 June 216. Pet insurance in UK and Japan UK Japan Population 62.7 million million Number of cats and dogs kept 15.2 million 19.8 million No of population per head 1pet/4.1 person 1 pet/6.4 person Pet insurance penetration 23-25% 5.4% Source: UBS, Anicom Animal White Book, J.P. Morgan Asset Management, the latest data available as of 3 June 216. Number of pet hospitals in Japan 12, 11,5 11, 1,5 1, 9,5 9,245 9,482 1,27 1,135 9,729 9,836 1,741 1,551 1,35 11,32 11,259 11,486 9, 8,5 8, Source: Anicom Group, as at 3 June 216. Source: UBS, Anicom Animal White Book 214. J.P. Morgan Asset Management The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. However, it cannot be assumed that these types of investments will be available to or will be selected by the portfolio in the future. Subject to change at the discretion of the Investment Manager without notice.

11 93c2a814acf1c Demand for dressings in China is taking off from a low base Kewpie is the no.1 mayonnaise and dressing maker in Japan by market share. It also has 9% market share in Beijing and 6% in Shanghai for home-use mayonnaise and dressings.* Mayonnaise, salad dressing consumptions and bakery shop sales are increasing in China CNY million Mayonnaise Salad Dressings In-store unpackaged bread (RHS) Source: UBS, Euromonitor, the latest data available as at 31 May 216. CNY million Production volume and per person consumption of dressings in Japan (g) 3,5 3, 2,5 2, 1,5 1, 5 - Estimated current per-person consumption in China Consumption per person in Japan (LHS) Production of dressings (RHS) (1t) Dressings consumption increased in Japan along with the country s economic expansion. China is likely to follow the similar path. Source: Kewpie, 31 May 216 *Source: UBS, as at 215 Source: The Ministry of Internal Affairs and Communication and the National Association of Class Mayonnaise Dressing The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. J.P. Morgan Asset Management may or may not hold positions on behalf of its clients in any or all of the aforementioned securities. Past performance is not necessarily a reliable indicator for current and future performance.

12 JPMorgan Japan Smaller Companies Trust Plc This is a promotional document and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are unless otherwise stated, J.P. Morgan Asset Management s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Changes in exchange rates may have an adverse effect on the value, price or income of the product(s) or underlying overseas investments. Both past performance and yield may not be a reliable guide to future performance. There is no guarantee that any forecast made will come to pass. Furthermore, whilst it is the intention to achieve the investment objective of the investment product(s), there can be no assurance that those objectives will be met. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co and its affiliates worldwide. You should note that if you contact J.P. Morgan Asset Management by telephone those lines may be recorded and monitored for legal, security and training purposes. You should also take note that information and data from communications with you will be collected, stored and processed by J.P. Morgan Asset Management in accordance with the EMEA Privacy Policy which can be accessed through the following website Investment is subject to documentation (Investment Trust Profiles, Key Features and Terms and Conditions), copies of which can be obtained free of charge from JPMorgan Asset Management Marketing Limited. Issued by JPMorgan Asset Management Marketing Limited which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No: Registered address: 25 Bank St, Canary Wharf, London E14 5JP. 93c2a8154c5de