Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Great Investment Bargains in Japan - How to participate in the coming boom

Stock-Markets / Japanese Stock Market Mar 27, 2007 - 10:41 AM GMT

By: Money_and_Markets

Stock-Markets

While China is indeed growing like a weed, many of its Asian neighbors are growing almost as rapidly. What's more, the stocks in some of these other countries are trading at lower valuations.

Since I was born with the cheapskate gene, I just love bargains. So today I want to tell you about Japan, a great place to find some of Asia's greatest value stocks.

Let's start with three facts:

Fact #1: Japan boasts the second-largest economy and stock market in the world.


China may have the sexier growth story, but Japan is far bigger in terms of current stature. In fact, the total value of the Japanese stock market is five times the size of China's market.

Fact #2: Japan is poised to benefit from the growth of its Asian neighbors, including China.

Japan has long been a heavy exporter, and China is eager to tap into Japan's technical expertise in areas like auto manufacturing, industrial machinery, and construction. As a result, Japan is now China's largest trading partner. And it's one of the few countries in the world that has a trade surplus with China.

Fact #3: Japanese stock prices are still 60% below their 1989 peak.

It's hard to believe, but 17 years after the Japanese market hit all-time highs, the country's stocks are still trading at a fraction of those levels. In fact, with a price-to-cash-earnings ratio of 8.5 and a price-to-book ratio of 1.9, Japan is the least expensive major equity market in the world.

Bottom line: Japan is an important force in the world … its economy is benefiting from the strength of its Asian neighbors … and yet its stocks remain cheap by historical and relative measures.

On top of that …

The Japanese Economy Is Strengthening From Within

Japan has transformed itself into a leaner, more efficient, and more profitable economy. It took years of painful restructuring, long-overdue layoffs, the trimming of unprofitable business lines, and debt reduction but it's starting to pay off.

After a 17-year wait, the Japanese economy is ready to roar along with the rest of its neighboring Asian tigers. One sign: Strengthening real estate.

Japan has been one of the very few parts of the world where real estate prices haven't been on fire. Nationwide, commercial and residential prices are still half of what they were in 1991.

But, according to the country's Ministry of Land, Infrastructure and Transport:

  • In 2006, Japanese land prices rose for the first time in 16 years. The average price for commercial land in Japan's three largest cities rose 8.9%, while residential land prices grew 2.8%.
  • Tokyo office vacancies fell to 2.87% in January, the lowest monthly level in at least six years.
  • Real estate companies were gaining favor with investors, too. Last year, Mitsubishi Estate and Mitsui Fudosan rose 50% and 31%, respectively. And the Tokyo Stock Exchange REIT Index has gained about 40% in the last six months.

This renewed activity is spilling over into other areas, too. According to just-released statistics from the Bank of Japan, the value of financial assets held by Japanese households at the end of December hit a record 1.541 quadrillion yen (US$13.053 trillion).

It seems as though the Japanese are finally gaining confidence in their country's prospects. They're starting to pull their money out of the bank and from under their mattresses, and invest it in stocks and bonds — the balance of cash and bank deposits held by Japanese households declined by 0.5% from a year earlier.

You can't blame Japanese investors for being gun-shy … 17 years of waiting is long enough to strain anybody's patience. But if the country's conservative households are leaving the banks and shifting their money into other assets, it may be the time for foreigners to do the same.

How to Participate in the Resurgence of Japan

In my book, the best way to invest in Japan is by picking out the individual companies that are already seeing exploding revenues and profits. Then, I take a look at their share prices to make sure they still represent good values.

However, for a more diversified approach to Japan's stocks, Americans can choose from seven different exchange-traded funds.

Investors interested in the big-name, large-cap issues should check out the SPDR Russell/Nomura Prime Japan (JPP) , and the iShares S&P/TOPIX 150 (ITF) .The iShares MSCI Japan Index Fund (EWJ) also mainly holds large-cap stocks, though it has some smaller companies thrown in for good measure.

For a fund with a greater focus on small- and mid-cap companies, look to the SPDR Russell/Nomura Small Cap Japan (JSC) .

If you're specifically interested in stocks that pay dividends, there are three different ETFs being offered by WisdomTree that fit the bill — the Japan Total Dividend Index Fund (DXJ) , the Japan High-Yielding Equity Fund (DNL) , and the Japan SmallCap Dividend Index Fund (DFJ) .

Remember, there's a lot more to Asian investing than just China. So if you're looking for a low-valuation way to participate in the economic miracle unfolding overseas, keep Japan in mind. I think you'll really like what you see.

Best wishes,

Tony Sagami

P.S. If you're interested in hearing more about my favorite undervalued Asian stocks, subscribe to my Asia Stock Alert service.
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.MoneyandMarkets.com


© 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