Japan macro-strategy:Internationalisation &ROEs

We believe investors need to rotate from “cyclical value” into companieswith high ROEs, and this applies even within the internationalisation thematic.

Companies seeking growth overseas is expected to remain one of the majoruses of corporate cash-flow. In-Out M&A remains near historic highs, Fig 7.

Our internationalisation baskets are shown in Fig 3; there are 61 companies.

The average ROE of those that have at least doubled in share price since end2007 is 14.6% (14 companies, highlighted in pale red in Fig 3). TOPIX rose10.0% from end-2007 to latest, Fig 4. The average ROE of the other 47companies is 8.6%. The top four ROE companies in the baskets are shownbelow.