Oakmark Japan Strategy Q1 2025 Commentary

2025-04-23 11:12:00 ET

Summary

• Oakmark Japan Strategy’s return was 5.04% (net) for the reporting period versus MSCI Japan Index (Net) that returned 0.34% for the same period.
• Japanese equity markets declined during the quarter amid ongoing volatility, driven by a combination of investor concern over the potential impact of looming tariffs on exporters and uncertainty on the timeline of future Bank of Japan rate hikes.
• The standing belief that the BoJ will continue to increase rates over the near-term contributed to the Yen’s moderate appreciation during the quarter.

MARKET ENVIRONMENT

Japanese equity markets declined during the quarter amid ongoing volatility, driven by a combination of investor concern over the potential impact of looming tariffs on exporters and uncertainty on the timeline of future Bank of Japan (BoJ) rate hikes. In Tokyo, core consumer inflation accelerated throughout the period, remaining above the BoJ’s target and fueling market expectations of further rate increases. The standing belief that the BoJ will continue to increase rates over the near-term contributed to the Yen’s moderate appreciation during the quarter. 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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