David Mitchinson, a fund manager at Zennor, suggests that Japanese executives are increasingly receptive to European scrutiny. Unlike their American counterparts, European managers bring a familiarity with cross-shareholding structures common in markets like Germany, making them more natural partners for Japanese firms navigating complex restructuring. This long-term alignment is helping move companies away from the insular, stagnant practices of the past.
European Investors Find Fresh Leverage in Japanese Boardrooms
London-based Zennor Asset Management argues that Japan’s corporate landscape is undergoing a fundamental shift, as European investors successfully press local boards to unlock stagnant cash and improve governance. This collaborative pressure is proving more effective than aggressive US-style activism, fostering a new environment where management and shareholders interests finally align.
While the process demands rigorous engagement, the results are manifesting in higher dividends and more aggressive share buybacks. The valuation gap remains significant: roughly 31 percent of Japanese companies traded below their book value as of August, a sharp contrast to the US and Europe. Consequently, Zennor’s strategy focuses on identifying overlooked assets and mispriced cash flows, exemplified by their recent launch of the Japan Himawari Fund. This portfolio prioritizes industrial leaders like Keyence and Toyota, betting that the broader trend of rising wages and improved operating margins will sustain Japan's market outperformance.
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