Vantage Point Asset Management is increasing its stakes in Japanese equities and the US dollar, anticipating that a Donald Trump victory in the upcoming US presidential election will boost global growth and keep inflation elevated, according to a report by Bloomberg.
According to Nick Ferres, the $1.5bn Singapore-based firm’s Chief Investment Officer, higher Treasury yields would mean a stronger dollar, and a weaker yen, a combination that typically favours Japan’s export-driven economy.
Ferres cites strong voter registrations, favourable betting odds, and key market indicators, including rising bond yields and a stronger dollar, as all pointing to a Trump victory.
Treasury yields on 10-year US government bonds have risen by 39 basis points this year, while the Bloomberg dollar index is up by 4%. The yen has dropped 7.8% against the dollar in 2023, and Japan’s Topix stock index has gained 13%.
Vantage Point has allocated 15% of its flagship Asia fund to Japanese stocks and another 15% to the dollar-yen exchange rate, with plans to build on both positions, according to Ferres, who predicts the yen could decline further, potentially breaching 160 yen to the dollar and even reaching 200.
Vantage Point’s flagship fund has posted a 20% return this year on a gross, unaudited basis, outpacing the MSCI Emerging Markets Index by about 50% over the last three years. Ferres believes Japan’s industrial production correlations position its equities to gain from global economic momentum, which he sees as likely under Trump’s policies.
“Japan has the highest beta to industrial production among major markets, aside from Korea,” he noted. “A Trump win would amplify the gains, but Japanese stocks wouldn’t suffer under a Harris win either.”
Ferres downplayed concerns over Trump’s stance on China, suggesting tariffs would likely be a negotiation tool rather than a strict policy stance, leaving room for potential cooperation and growth across Asia.
