Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Investing lessons from the 1987 Stock Market Crash From Who Beat it - 20th Oct 19
Trade Wars: Facts And Fallacies - 20th Oct 19
The Gold Stocks Correction and What Lays Ahead - 19th Oct 19
Gold during Global Monetary Ease - 19th Oct 19
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Investing in Japan: Is There Light at the End of the Tunnel?

Stock-Markets / Japanese Stock Market May 30, 2012 - 11:20 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleMartin Hutchinson writes: Most people have given up on investing in Japan.

With an aging population and far too much government debt, the conventional wisdom is that Japan will never again see the vigorous economic growth it once enjoyed.


The earthquake and tsunami of March 2011 only reinforced this view. However, that tragic episode did have another side.

It showed the resilience and discipline of Japanese society.

There was almost no looting, for example -- and recent economic data suggest that the Japanese economy is not as dead as it seemed.

First quarter Japanese gross domestic product (GDP) came in at an annual growth rate of 4.1% --far higher than the United States, Canada, Australia, or anywhere in the Eurozone.

Given that Japan has been in perpetual near-recession for 21 years, with no surges of productivity like the U.S. enjoyed in the late 1990s, it's really not a bad performance.

You can also see Japan's true strength from its exchange rate, which is currently 79 yen to the dollar, up from around 120 five years ago. That makes visiting Tokyo very expensive.

However, it's also sign of a highly competitive economy.

Investing in Japan: What You Need to Know
It's notable that observers in the United States, a country which perpetually runs payment deficits of $500 billion-$600 billion annually, sneer at the economies of Japan and Germany, which are almost always in surplus.

Before 1995, I lived in another economy that was similar. Britain ran deficits much like the U.S. does.

So believe me when I tell you, deficits are not exactly a sign of superior economic health.

The reality is that Japanese and German products and services are highly competitive, both in advanced economies and in emerging markets. Conversely, U.S. exports are not as competitive except in a few sectors.

Even so, the Japanese stock market is still trading at less than a third of its 1990 peak.

However, that's no longer something to sneer at since the S&P 500 is also trading well below its 2000 peak.

The reality is that speculative bubbles such as that in Japanese stocks and real estate in the 1980s and U.S. stocks in the 1990s and housing in the 2000s are enormously damaging. The after-effects can last for years, or even decades.

Truly Alan Greenspan, Ben Bernanke and their 1980s Japanese counterparts have a lot to answer for.

These quasi-politicians at central banks should not be allowed to play games with the money supply. Rather, they ought to adopt an automatic system such as a gold standard.

Of course, it's all very well quoting the superior returns over the long term from equity investments. But the truth is, we have finite lifespans.

An investment in the U.S that loses money for 12 years and counting -- or 22 years and counting in Japan -- is not very attractive as a means of saving for retirement (unless you're 25).

Nevertheless, while the tunnel may be a long one, it is not an infinite one. Today in Japan there are signs we may be emerging from the other end.

Robust growth is the means by which both Japan and eventually the U.S. will emerge, which will reduce the excessive debt levels in the system and allow equity and other asset values to start increasing again.

Naturally, the politicians have to stop running huge deficits in order for this to happen, but in Japan this may finally be happening, with the government proposing to double the consumption tax to 10% in two stages by 2015.

Two Ways to Invest in Japan
Since Japan's export sector is hampered by its high exchange rate, the best Japanese investment would focus on the smaller companies. Such companies benefit from domestic growth and are themselves suppliers to the export giants.

The SPDR Russell/Nomura Japan smaller companies ETF (NYSE: JSC), for example, has now been running since 2006 and has an expense ratio of a modest 0.56%. It looks to be an excellent way to tap into Japanese small company growth.

Alternatively, you should consider investing in the Japanese financial sector, which has major growth opportunities in Asia and has avoided many of the problems of the 2008 meltdown.

In this area the best-capitalized company is Orix Corporation (NYSE: IX).

Orix, originally a leasing specialist, has expanded into most sectors of commercial and investment banking, with an emphasis on investment rather than trading. It has capital of around 15% of assets -- nearly double the capitalization ratio of most banks, in Japan or elsewhere.

What's more, Orix is trading on a P/E ratio of around 10 and at 53% of book value. For Japanese-minded investors it's also a bargain.

After a long downturn, Japan is poised to rebound. The conventional wisdom, as is often the case, is wrong.

Source :http://moneymorning.com/2012/05/30/investing-in-japan-is-there-light-at-the-end-of-the-tunnel/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules