CSMYF - Harris Associates Japan Strategy Q1 2024 Commentary

2024-05-25 09:45:00 ET

Summary

• Harris Associates is an asset management firm that serves as the investment adviser to the Oakmark Funds. We seek to invest in businesses that are priced at substantial discounts to our estimate of intrinsic value.
• Japanese equity markets rose in Q1 2024, led by large cap and semiconductor companies, exporters, and low quality stocks.
• The portfolio's return was 3.01% for the reporting period, compared to the MSCI Japan Index's return of 11.01%.
• Top contributors to the portfolio's performance were Toyota Motor, Sumitomo Mitsui Financial, and Sumitomo Mitsui Trust, while detractors included OMRON, TechnoPro Holdings, and Cosmos Pharmaceutical.

Market Environment

Japanese equity markets rose during the first quarter of 2024, led by large cap and semiconductor related companies, exporters, and generally low quality stocks. The Bank of Japan enacted its first rate hike since 2007 and exited negative interest rate territory. We view this as a meaningful step toward normalizing the country's monetary policies, as we continue to believe the hyper accommodative policy by the Bank of Japan is unsustainable over the medium and long term. This is an area we are watching closely as it directly impacts our holdings in financial companies, like Sumitomo Mitsui Financial Group ( SMFG ) and Sumitomo Mitsui Trust ( SUTNY ). The yen lost value relative to the U.S. dollar during the quarter, ending around 151 USD/JPY....

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