SMFNF - Oakmark Japan Strategy Q4 2024 Commentary

2025-02-04 12:45:00 ET

Summary

• The portfolio’s return was -7.75% (net) for the reporting period vs. MSCI Japan Index (Net) that returned -3.60% for the same period.
• Japanese equity markets finished higher during the quarter despite significant volatility.
• We did not initiate any new positions during the period. We did not eliminate any positions during the period.

MARKET ENVIRONMENT

Japanese equity markets finished higher during the quarter despite significant volatility. The Bank of Japan (BoJ) held its two-day policy meeting in December and announced it would hold interest rates at 0.25% despite core consumer inflation in Tokyo continuing to accelerate, which contributed to the Yen depreciating to a near 5-month low. This acceleration in inflation combined with a summary of opinions from the BoJ meeting where policymakers expressed confidence in an imminent rate increase is leading analysts to expect an interest rate hike from the BoJ in the near term. Although we are not macro experts, we retain our view that Japan has exited its multi-decade period of deflation and interest rates will normalize over the medium term....

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