February 24, 2017 5:00 am JST

Foreigners rotating out of pricey Japanese exporters

Shine comes off auto and semiconductor shares as domestic stocks get a boost

TOKYO -- Overseas investors are selling expensive export-focused shares here and instead putting money into companies oriented toward the domestic market.

Recent large-shareholdings reports to the Ministry of Finance shed light on portfolio adjustments by big institutional investors from abroad.

U.S. President Donald Trump's criticism of the weak yen is clouding the outlook for Japanese businesses with high exposure to overseas markets. Concern over the proposed American border adjustment tax has prompted many to unload autoparts stocks as well.

American asset management giant BlackRock's Japanese unit cut its stake in major exhaust system supplier Futaba Industrial by about 2 percentage points to 4.46%.

Semiconductor-related shares are also under selling pressure. Wellington Management of the U.S. lowered its stake in Shinkawa by 1.64 points to 4.2%. The chipmaking equipment builder is expected to swing to the black in the current year ending March 31. But its shares are expensive, with a forward price-earnings ratio of roughly 90. "The stock appears overpriced and is prone to profit-taking," said Hirokazu Kabeya, chief strategist at Daiwa Securities.

Meanwhile, underpriced domestic-market-focused shares are attracting money from foreigners. BlackRock Japan recently became a key shareholder in bowling alley operator Round One, increasing its interest to 5.1%. Tybourne Capital Management of Hong Kong did the same with Ain Holdings, becoming a 5.2% owner of the drugstore operator.

FMR of the U.S. raised its stake in confectionery maker Morinaga by 1.04 points to 6.12%, and in workwear chain operator Workman by 1.81 points to 9.2%.

Speculation that the yen may strengthen in response to comments by Trump and other factors is likely driving investors to domestically focused stocks, which are more insulated from the ups and downs of foreign exchange rates.

(Nikkei)

Futaba Industrial Co., Ltd.

Japan

Market(Ticker): TKS(7241)
Sector:
Industry:
Producer Manufacturing
Auto Parts: OEM
Market cap(USD): 794.33M
Shares: 89.58M

Shinkawa Ltd.

Japan

Market(Ticker): TKS(6274)
Sector:
Industry:
Electronic Technology
Electronic Production Equipment
Market cap(USD): 139.81M
Shares: 20.04M

ROUND ONE Corp.

Japan

Market(Ticker): TKS(4680)
Sector:
Industry:
Consumer Services
Movies/Entertainment
Market cap(USD): 1,001.53M
Shares: 95.45M

Ain Holdings, Inc.

Japan

Market(Ticker): TKS(9627)
Sector:
Industry:
Retail Trade
Drugstore Chains
Market cap(USD): 2,414.71M
Shares: 31.88M

Morinaga & Co., Ltd.

Japan

Market(Ticker): TKS(2201)
Sector:
Industry:
Consumer Non-Durables
Food: Specialty/Candy
Market cap(USD): 3,072.77M
Shares: 54.18M

Workman Co., Ltd.

Japan

Market(Ticker): JAS(7564)
Sector:
Industry:
Retail Trade
Discount Stores
Market cap(USD): 1,205.94M
Shares: 40.92M

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