At first glance, Japan may seem like a difficult place to invest right now. Geopolitical tensions, rising energy costs, trade friction: the 2026 headlines paint a challenging picture. But there is another side that these reports miss: the Japan of quietly resilient companies, built to grow regardless of the macro environment. That resilience has deep roots, and what the Japanese refer to as “ikigai,” a philosophy of endurance shaped by four centuries of self-reliance that still defines how the country organises itself under pressure. Our investment case is built on this Japan.

KEY TAKEAWAYS

— Japan is exposed to current geopolitical and energy shocks. Our companies are global franchises whose earnings are largely independent of Japan’s energy position.
— We believe quality growth companies are well placed to withstand periods of disruption. Japan’s corporate resilience appears stronger than market sentiment suggests.
— We believe durable competitive advantages serve as an important line of defence in challenging markets. We seek businesses with pricing power and the potential for structural growth, rather than those primarily exposed to macro conditions.
— We see opportunity, rather than risk. In our view, current valuations do not fully reflect the quality or earnings potential of the businesses we own in Japan.

PURPOSE PERSISTS. CRISES PASS.

Japan has navigated energy shocks before. The 1973 Organisation of Arab Petroleum Exporting Countries (OAPEC) embargo prompted a fundamental rethinking of the country's energy policy, leading to strategic reserves now equivalent to 254 days of domestic consumption, a diversified supply of liquefied natural gas (LNG) and an institutional memory that turns disruption into policy action rather than paralysis.

Japan still relies on the Middle East for around 95% of its crude oil, with approximately 70% of those imports transiting the Strait of Hormuz, but the release of a record 45 days of oil reserves since the Middle East crisis began shows that the buffer built after 1973 is not merely theoretical. It is an active policy instrument and it is already being used.

The disruption is real. Oil prices have risen to well above US$100 per barrel, shipping has been severely disrupted and inflation pressures are building. However, the macro impact is not uniform – a distinction that matters to us.   

READ MORE NOW