Third Point Sees Abe Reforms Driving Japan Equity Purchases

Billionaire Daniel Loeb’s Third Point LLC, which built a stake in Sony Corp. (6758), said economic reforms under Prime Minister Shinzo Abe will create more stock buying opportunities in Japan.

Abe is using fiscal and monetary stimulus to end 15 years of deflation, a move that has helped boost the nation’s equity market to a five-year high. The so-called third arrow of his strategy involves structural reform to regulations, tax and other policies to boost investment and competitiveness.

“We believe Premier Abe has the best chance in over a generation to enact the reforms to push Japan forward,” according to the hedge fund’s quarterly investor letter dated yesterday. “If he acts on these initiatives, we will be eager buyers of additional Japanese stocks beyond our significant investment in Sony and current holdings in other Japanese companies.”

The government program has seen the yen weaken, boosting the value of export earnings for Japanese manufacturers including Toyota Motor Corp., Sony, Nissan Motor Co. (7201) and Panasonic Corp. (6752) The nation’s benchmark Topix index has surged 42 percent this year and reached its highest level since 2008.

Third Point built a 6.9 percent stake in Tokyo-based Sony and in a May 14 letter asked the Japanese electronics maker to sell a portion of its entertainment business and disclose more financial details from the unit. Loeb told the Nikkei newspaper last week the company decided to do the “very things” he asked even without a spinoff listing of its entertainment unit.

Sony shares, which have almost doubled this year, lost 2 percent to close at 1,896 yen in Tokyo trading. The Topix index has added 39 percent this year.

To contact the reporter on this story: Grace Huang in Tokyo at xhuang66@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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