Invesco's New CIO for Japan Favors High-Tech Environmental, Energy Stocks

Invesco Asset Management (Japan) Ltd.’s new chief investment officer favors Japan’s environmental and renewable-energy shares.

The nation’s shares are cheap even as corporations raise their growth outlooks because of increases in overseas demand and measures to reduce costs, said Kunihiko Sugio, Invesco’s chief investment officer. Share prices have slumped to “unexpectedly” low levels since April, on concern over Europe’s sovereign debt crisis, he said. Sugio joined Invesco on July 5 from Morgan Stanley, where he was a managing director and oversaw Japan funds.

“Companies with advanced technologies can add high value in solar batteries, nuclear-power generation, hybrid cars and light-emitting diodes.” said Sugio in an interview in Tokyo. “These are Japan’s strengths.”

Shares in the benchmark Topix trade at a price-to-book ratio of 1 on average, compared with 1.9 for the Standard & Poor’s 500 Index and 1.5 for the Stoxx Europe 600 Index. Stocks in a Topix gauge for electronics companies, which includes some battery makers, trade at 1.3. Japanese shares will likely climb as Europe recovers from its sovereign-debt crisis, he said.

“A double-dip recession is unlikely because the global economy is showing signs of a slow recovery,” said Sugio. “And I expect external demand will boost Japanese companies that have established a presence in overseas markets.”

In Japan’s mature market, companies have to rely on leading edge technologies to attract foreign investments, Sugio said. Invesco’s small capitalization fund focuses on stocks related to environmental technology, Internet, Asian consumer products and bio technology.

To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net.

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