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Baillie Gifford Shin Nippon reports interims with sterling weakness boosting returns

Baillie Gifford Shin Nippon targets up to 10% in unquoteds

Baillie Gifford Shin Nippon reports interims with sterling weakness boosting returns – Over Baillie Gifford Shin Nippon’s (BGS) interim results period to 31 July 2019, sterling-based investors benefited from the currency’s weakness against the Japanese yen, despite sluggishness in the Japanese equity market.

The company’s NAV rose 15.3% compared to a 9.8% rise in the MSCI Japan Small Cap Index. The share price increased by 8.1%. Further summary information provided includes:

  • Longstanding holding GMO Payment Gateway was the largest positive contributor to performance. Its core online payments processing business continues to grow rapidly;

  • Most of the weak performers in the first half of the year were cyclical companies with exposure to global demand;

  • New purchases included Kitanotatsujin, a fast growth, specialist online cosmetics company, and Tsugami, a specialist machine tool maker.

BGS add that over three and five years, the comparative index is up by 29.8% and 92.2% respectively, while the company’s NAV per share is up by 63.8% and 193.4%.

The following extract is taken from the manager’s report section: “Global markets are currently experiencing high levels of uncertainty and Japan is no exception. The slowdown in economic growth across many large economies is being exacerbated by the ongoing trade war between the US and China. It is natural to expect market weakness in these conditions as investors adopt a cautious approach towards equities in general. However, for us as long-term growth investors, the current environment is giving rise to numerous exciting investment opportunities.

Many high quality and rapid growth companies, including some that we currently own, are seeing sharp declines in share prices that appear to be divorced from the fundamental long-term attractions of these businesses. Contrary to the prevailing pessimistic sentiment, we are excited at the prospect of investing in these businesses. We remain confident that the inherent strengths of their business models will enable them to deliver attractive long-term returns for patient shareholders.”

BGS: Baillie Gifford Shin Nippon reports interims with sterling weakness boosting returns

 

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