Hong Kong-based Chartwell Capital is entering into a strategic partnership with SPARX Asia Investment Advisors (SAIA), the Hong Kong arm of Japanese headquartered asset manager SPARX Group.
Both firms aim to expand their client base and share investment research on Japanese-listed and Hong Kong-listed companies.
Ronald Chan, founder and chief investment officer of Chartwell Capital said: “This collaboration comes at a pivotal moment as the markets in both Japan and Hong Kong continue to offer strong potential for growth.”
Yusuke Fukumoto, president of SAIA said: “We are thrilled to partner with Chartwell Capital, whose deep understanding of Hong Kong perfectly complements our expertise in Japan.”
“This is an exciting time for both markets, and we believe this partnership will unlock substantial opportunities for investors.”
Japanese stocks have been on a tear recently as a reforms in corporate governance behaviour and the emergence from a prolonged period of deflation has paved the way for a 47% rally in the nation’s flagship TOPIX index.
Chan told a media briefing in Hong Kong that there has been “tremendous” interest from his clients to invest in Japan, and suggested that as integration between the Guangdong-Hong Kong-Macao Greater Bay Area grows, this could increase.
“The Greater Bay Area (GBA) is a $2trn economy, with 86 million people and growing – so helping each other to navigate this region could generate immense opportunities,” he said.
“Whether its GBA residents being interested in Japan through Chartwell, or SPARX investing in the GBA through Chartwell, it’s a mutually beneficial relationship.”
The partnership announcement comes just a month after Hong Kong-listed stocks surged as much as 33% after news of long awaited stimulus measures from the Chinese government.
However SPARX founder and CEO Shuhei Abe has long been vocal about his ambitions to expand the firm’s investment reach beyond Japan towards Asia more broadly.
Certain vehicles managed by SPARX already have exposure to Hong Kong-listed companies through its pan-Asia strategies.
Yet Chan thinks that Hong Kong-listed companies could still do better to improve their return on equity (ROE), given how successful the recent corporate governance changes in Japan have been for the nation’s own stock market.
“I think the Hong Kong stock exchange has been doing a marvellous job in pushing corporate governance, but we have not yet touched upon return on equity,” he said.
“If you look at some of these highly geared property companies, their ROE may not be necessarily that high if you take leverage off the balance sheet.”
He added: “I think Japan is attractive for its own reasons, and Hong Kong is attractive for other reasons, but they also show similarity. The good thing about this partnership is that we share the same philosophy,” alluding to both firms’ emphasis on a value-focused investment approach.
