Tokyo - Impressed by the so-called FANG shares’ performance over the past year? Japan has a similar group that’s doing even better.
Meet the Sunrise stocks: SoftBank, Nintendo, Recruit and Sony (SNRS, or Sunrise). They’ve risen an average of 65% in the 12 months through Friday, versus an average 44% gain for the group known as FANG: Facebook, Amazon.com, Netflix and Google’s parent Alphabet Japan’s benchmark Topix index added 19% in the period.
While both clusters feature members of the new economy, one thing that binds the Sunrise stocks, as some market participants have taken to calling them, is their overseas prospects. Masayoshi Son’s SoftBank, for instance, has been seeking a turnaround at Sprint in the US, Sony has its PlayStation, semiconductor and entertainment businesses, while Nintendo’s Switch console has become a global bestseller. Recruit, perhaps the least known of the group outside Japan, bought a US job site in 2012.
“All four companies had been roiled by lackluster earnings for two or three years,” said Richard Kaye, a portfolio manager at Nippon Comgest. “Their overseas potential had been underestimated until now, but they’re now being reassessed.”
Nintendo’s stock more than doubled over the 12 months through the end of last week, the best performance of the Sunrise stocks, as strong sales of Switch domestically and overseas cheered investors. Recruit surged 59%, on bets US online job search engine. Indeed will contribute to profit. SoftBank added 55% on signs Sprint’s earnings have bottomed out and on expectations for its $100bn Vision Fund, while Sony gained 34%.
Oasis Management’s Seth Fischer recommended Sony’s shares at the Sohn Conference in Hong Kong last week. Fischer, the chief investment officer of Oasis, said Sony, like the FANGs, was a good investment idea “hiding in plain sight.” He cited the turnaround under Kazuo Hirai, good corporate governance, and strong businesses including home gaming as reasons for suggesting the stock could rise as much as 39%.
The Sunrise stocks helped push the Topix above 1,600 earlier this month, a level not seen since 2015. The FANGs, meanwhile, tested US equity bulls on Friday, with each company falling at least 2.8% as the Nasdaq 100 posted its biggest drop relative to the Dow Jones Industrial Average since 2008.
The Sunrise shares each slid at least 1.2% in the morning session in Tokyo on Monday, as Friday’s decline in US technology companies spilled over into the Japanese market.