Pine River Co-CIO Steve Kuhn Recommends Japanese Equities

Steve Kuhn, co-chief investment officer of $15.6 billion hedge fund firm Pine River Capital Management LP, recommended buying Japan’s JPX-Nikkei Index 400 because the nation’s stocks are still cheaper relative to bonds.

“Its one of the more compelling trades I have seen in a long time,” Kuhn said at the Invest for Kids conference in Chicago today. He said that cash on Japanese companies’ balance sheets was at record highs and that corporate governance in the country is “bad but definitely getting better.”

Prime Minister Shinzo Abe made improving company governance a key pillar in the nation’s revised growth strategies in June. The Bank of Japan also unexpectedly expanded monetary stimulus last month, sending global stock markets higher. The JPX-Nikkei 400 returned about 7.2 percent this year, including dividends.

Kuhn said Pine River, based in Minnetonka, Minnesota, has invested in rising Japanese equities that will attract “disproportionate” inflows from the Government Pension Investment Fund and other investors.

Kuhn said he had previously traded Japanese convertible bonds at Chicago hedge fund firm Citadel LLC.

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