The Matthews Japan Fund (Trades, Portfolio), founded in December 1998, has $571.9 million in assets as of Sept. 31, 1998. With all of the changes taking place in Japan’s economy, including Prime Minister Shinzo Abe deciding whether to raise the country’s consumption tax to 10% from 8% by mid-December, which the fund managers believe would have an “undesirable impact on consumption,” they said in their third quarter commentary they “intend to focus our research efforts on capable managed companies with strong pricing power that can navigate these rough waters.”
Matthews Asia Fund managers also discussed their change of portfolio tactic in the third quarter:
“During the quarter, we increased exposure to mid- and large-capitalization manufacturers with meaningful exposure to overseas business. We believe select Japanese companies are starting to take advantage of the weak yen, taking back market share in sectors such as technology and automobiles. Additionally, we selectively added to consumer-related holdings in companies that have successfully tapped into the growth of Asian markets. On the other hand, we’ve reduced our exposure to the domestic financial sector, namely in banks and real estate.”
Matthews Asia added eight new stocks in the quarter, for a total of 63 in the portfolio. The largest new stocks added to the portfolio in the third quarter were: Hoya Corp (TSE:7741, Financial), Rohm Co. Ltd. (TSE:6963, Financial), Mazda Motor Corp (TSE:7261, Financial) and Sac’s Bar Holdings Inc. (TSE:9990, Financial).
Hoya Corp (TSE:7741, Financial)
Managers bought 351,400 shares of their largest new position, Hoya Corp, which had an average quarterly price of 3427 yen. The stock represents 2.1% of the portfolio.
Hoya Corporation was established on Nov. 1, 1941. Hoya Corp has a market cap of $1567.58 billion; its shares were traded at around 3907.50 yen. The dividend yield of Hoya Corp stocks is 1.66%.
Rohm Co. Ltd. (TSE:6963, Financial)
Matthews Asia purchased 171,200 shares of Rohm Co Ltd. in the third quarter, making it 1.9% of the portfolio. The stock price averaged 6235 yen in the quarter.
Rohm Co. Ltd. manufactures and distributes electronic components and integrated circuits. Rohm Co. Ltd. has a market cap of 699.66 yen billion; its shares were traded at around $6670.00 with and P/S ratio of 2.06. The dividend yield of Rohm Co. Ltd. stocks is 0.74%.
Mazda Motor Corp (TSE:7261, Financial)
Matthews Japan Fund (Trades, Portfolio) bought 351,700 shares of Mazda Motor Corp in the third quarter, making it 1.6% of the portfolio. The stock price averaged 2509 yen for the quarter.
Mazda Motor Corp. is engaged in manufacture and distribution of automobiles. Mazda Motor Corp. has a market cap of $1321.2 billion; its shares were traded at around 2,546.00 yen with a P/E ratio of 3.80 and P/S ratio of 0.52. The dividend yield of Mazda Motor Corp stocks is 0.17%.
Sac’s Bar Holdings Inc. (TSE:9990, Financial)
Matthews Japan Fund (Trades, Portfolio) purchased 540,450 shares of Sac’s Bar Holdings in the third quarter, making it 1.5% of the portfolio. The stock price averaged 1,506 yen in the quarter.
Tokyo Derica Co. Ltd. engages in the retail and wholesale of bags and pouches in Japan. Sac's Bar Holdings Inc. has a market cap of $45.46 billion; its shares were traded at around 1,586.00 yen with a P/E ratio of 19.10 and P/S ratio of 0.89. The dividend yield of Sac's Bar Holdings Inc. stocks is 0.95%. Sac's Bar Holdings Inc. had an annual average earnings growth of 24.60% over the past five years.
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