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Japan Is Waking Up to the Chinese Market

Matthews Asia's Jesper Madsen thinks Japanese firms that look to China for growth will be able to overcome domestic macroeconomic overhangs.

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Jeremy Glaser: You said about a quarter of your portfolio is in Japanese dividend paying stocks, but the yields of Japan are actually a little bit lower than it is in the rest of Asia. Why is that such a big concentration of yours with that lower yield there?

Jesper Madsen: I've been getting a lot of those kinds of questions, because, again, the obvious thing both from a macro perspective and from a yield perspective would be to exclude Japan. But as it happens, as bottom up investors, Japan is a large economy. You still have some of the best companies in the world at what they do. To give you some examples, if you are a Japanese company, you may not realize that your future growth may not only reside with what takes place in the US and in Europe, you've probably woken up to the fact that you have China right next door. So you start seeing cosmetics companies aggressively build a retail presence in China.

Jeremy Glaser does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.