Financial Mail Page 49 -28/06/21 14:41:19

global investor by Jean Pierre Verster

What’s big in Japan Finn 123RF/Stephen

he Tokyo Olympics will kick off later this month with an opening ceremony that is scheduled for Ju ly T23. Due to Covid, the games will be decidedly less celebratory than usual. No cheering, no foreign spectators, no alcohol sales at venues and no fraternising between ath- letes will be allowed. It will be an indi- cation of the future of major sporting events if humanity can’t get this pan- demic under control. video games such as Donkey Kong, After the bursting of its asset price Super Mario Bros, Pokémon and An i m a l bubble 30 years ago, Japan also gave us Cr o s s i n g . It also developed game-chang- a glimpse of what may be a strange eco- ing (excuse the pun) consoles like the nomic future — o ne of deflation, ultra- the world’s largest venture capital fund, Nintendo 64, Game Boy, Wii and Switch. loose monetary policy and negative pop- was launched in 2017 with more than The video gaming industry is noto- ulation growth. Central bankers are $100bn in capital. A second such fund riously hit-driven, profit growth being grappling with the negative conse- was launched in 2019. While the invest- heavily reliant on whether the next new quences of the “Ja p a n i f ic at io n ” of the ment in office space rental company game will be a hit, but Nintendo has built world economy. But Japan also offers a WeWork was a flop, SoftBank’s sprawl- up a valuable library of concepts over glimmer of hope for investors. While the ing investment portfolio has some real the years. Nikkei 225 index is still below its peak ge m s and is valued at almost double the By tweaking past hits and transition- of 1989, many astute stock pickers in current share price. ing players to subscription services like Japanese equities have been richly Nintendo Switch Online, the company is rewarded since then. Tokyo Electron well-placed to continue entertaining A winning investment strategy has As a world leader in semiconductor young and old. been to choose shares of those compa - production equipment, Tokyo Electron nies that pursued above-average growth manufactures machines that produce DIP Corp by expanding internationally in a disci- microchips. Due to the current world- The name is an acronym formed by the plined and shareholder-friendly manner. wide chip shortage, the company is first letters of the words “dreams, ideas Here follow some stocks that could coining it, with the shares trading at near and passion”. Founded by entrepreneur continue to outperform. record highs. Some investors sense a Hideki Tomita in 1997, it is an outlier. It bubble, but the demand for chips that has been one of the best-performing SoftBank Group are ever smaller and more powerful shares in Japan over the past decade by Headed by Masayoshi Son, Ja p a n ’s sec- seems insatiable. focusing on the domestic market. ond-richest person, SoftBank is Ja p a n ’s Semiconductor manufacturers are The company offers labour force equivalent of Naspers. Since 1999, when squeezing more and more transistors solutions, including personnel recruit- SoftBank invested $20m in Al i b a b a , the onto a silicon wafer. This process is ment, job training, online job-listing a nd value of the stake has grown to more becoming increasingly complex, raising robotic process automation. Its core than $100bn. The problem is that Soft- barriers to entry and increasing pricing business is Baitoru, Ja p a n ’s largest online Bank regularly trades at a discount of power. Current levels of profitability portal for part time job-seekers. The Nikkei 50% or more to the value of its under- might therefore be sustainable, making Co v id has had a serious impact on 225 index is lying investments. Tokyo Electron’s shares an attractive the past year’s profitability, especially still below its Son has responded by aggressively p r o p o s it io n even at record highs. due to the sudden drop in demand for peak of 1989, diversifying away from Alibaba and buy- temporary placement services in the but many ing other telecommunications and tech- N i n te n d o restaurant industry. Profits are expected astute stock nology assets, such as Vodafone Japan The innovative video gaming company to bounce back strongly in the year to pickers have (since renamed SoftBank Mobile) a nd was founded in 1889 and originally pro- come, though. been richly British computer processing giant Arm duced handmade playing cards. It has With the share price still slightly rewa rd e d Holdings. It has also purchased a large come a long way since then, keeping below the levels of February 2020, t he s i n ce minority stake in the US’s T-Mobile. pace with technological change. FM rates DIP Corp shares a buy. that date The ambitious SoftBank Vision Fund, Nintendo is responsible for popular Verster is CEO of Protea Capital Management

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