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CIMB Principal launches IPO of Bt1.5-billion equity fund, offering investors direct access to Japan stocks

CIMB Principal yesterday launched an initial public offering of the CIMB-Principal Japanese Equity Fund with a registered fund size of Bt1.5 billion. The IPO is available through February 11.

Minimum investment in the fund is Bt5,000. The open-ended fund will provide investors with direct access to large and mid-cap Japanese equities with good fundamentals and upside potential, the firm says.

Jumpon Saimala, chief executive officer of CIMB Principal Asset Management Thailand, said the fund would benefit from the financial policies of Japanese Prime Minister Shinzo Abe and recovery in the United States and Europe. Equities targeted for investment include Toyota Motor Corp, Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group, Softbank Corp and Mizuho Financial Group.

The feeder Principal Global Investors Japanese Equity Fund will be managed by Principal Global Investors. PGI has more than 20 years of direct experience in managing Japanese equities and has offices in Tokyo. Jumpon said the master fund had done relatively well, with an annualised return of 53.44 per cent in 2013, outperforming the funds benchmark MSCI Japan Equities by 1.58 percentage points.

CIMB Principal believes the Japanese economy is showing clear signs of a recovery towards sustainable growth in the longer term as a result of "Abenomics" and a more favourable global economic climate. The yen has weakened significantly against the US dollar, which is positive for exports. Unemployment is down and inflation is up, indicating a recovery in domestic consumption, and property prices are edging up amid strong signals of a recovery in demand and investment in major cities in Japan. In addition, Japanese equities have been under-owned by global portfolio managers in the past 20 years and as a result are expected to see increased allocation.

"After more than 20 years of lacklustre and anaemic growth, we believe that the recovery in Japan this time is real and exciting," Jumpon said.

He said the general consensus of analysts surveyed in Bloomberg was that the Nikkei Index by the end of the year would rise to roughly 18,000 points, implying an upside of 12-18 per cent from current levels. This would provide investors with an opportunity to reap the potential benefits of the "recovery story of the decade".


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