HONG KONG, May 24 Reuters Japanese stocks were in focus at a hedge fund conference this week, accounting for most of the top Asia investment ideas as asset managers highlighted Japan Inc39;s efforts to improve capital efficiency as well as the record run for Tokyo shares.

At the annual Sohn Hong Kong Investment Leaders Conference which invites 14 funds to pitch their top investment ideas, Japanese companies in outsourcing, robotics and the drug sector were in favour. Only two funds pitched ideas on Chinese stocks, down from seven in 2023.

The biggest opportunities in the world39;s thirdlargest economy are in companies with improving stories or are bolstering corporate governance, rather than firms that are already excellent, according to David Mitchinson, founding partner at Londonbased Zennor Asset Management.

Mitchinson recommends Transcosmos which provides outsourcing services and is likely to benefit from Japan39;s tight labour market. The firm39;s growth has slowed but it has shown willingness to improve capital management such as its plan to cancel treasury shares, he added.

While Japan has been bolstering governance for at least a decade, the effort got a big shot in the arm last year when the Tokyo Stock Exchange called on companies to improve capital efficiency. The bourse now publishes a monthly list of firms that have voluntarily disclosed plans to improve their use of capital.

Also helped by a weak yen, the benchmark Nikkei has surged 50 since the…