A huge, after the 40-year bull market, Japan’s Nikkei 225 Index blasted 38916 full-time closing high of December 29, 1989, Japan has grown into an economic powerhouse, flooding the world market, including in the United States, high-quality automotive, electronics and other manufactured goods.
Then came the flood. Japanese stocks fell in the next two decades, finally bottoming out in March 2009 an alarming decline in more than a shade 7000 82%. Terrible bear market rally will stall.
But the future of the Japanese stock market sunny. In the past five years, the Nikkei Index has returned 21.8% per annum (in yen currency net return). The income has been Prime Minister Shinzo Abe, who took office last week of December 2012 and has just won re-election. His economic policy regime, known as the “abenomics”, with monetary easing, fiscal stimulus and structural reforms in Japan’s struggling economy. (All returns through November 3, unless otherwise noted.)
Shinzo Abe’s economic policies to boost the stock price, yes, but they have yet to lead to rising consumer prices, which will in turn promote corporate profits and increases in wages. Inflation is still too low.
However, recently there have been some encouraging signs. Japan’s gross domestic product (GDP) growth in each of the past seven quarters, according to the third quarter of this year, preliminary data from the first long-term growth than small high tide more than a decade. Meanwhile, the Nikkei Index in early November in 21 years of strong earnings rose a new high of 22539, as Abe wins re-election. So far this year, the Nikkei index rose 19.5% (net return in yen) and the MSCI Japan Index, denominated in US dollars, has gained 18.4%.
Japan’s economy improving and the stock market stems both from abenomics and Japan in Asia, especially the rapid growth outside of China Taizo Ishida, co-manager said, Matthews Japan Fund (Symbol MJFOX), most of which are closed and new investors Matthew Addis growth (MPACX), with 36% of assets in Japan.
Ishida, who was born in Japan, has invested in Asian equities for 30 years, said rising incomes in AsiaIt led to an emerging middle class growing demand, many view this quality of Japanese products superior to those made in China. “All of a sudden, if you want to sell to Asia, it can,” he said.
He cites a Japanese company called pigeons, which makes baby care products, such as glass bottles care, to illustrate his point. Japan’s 126 million people, but in recorded history for the first time the number of newborns fell less than 1 million last year, making a limited baby care market.
With the above-mentioned 1.3 billion people, China is the last year of nearly 180,000 new babies. “So the dove came to China,” Ishida said. Therefore, the company’s revenue and profit margins have been rising doubled. (Pigeons do have available to American depositary receipts of US investors are trading under the symbol PGENY, but from the spread between bid and ask prices and volumes tiny huge ADR affected.)
Ishida said, Japanese companies have changed in recent years, although at a slow pace frustrating. Executives have started to take into account shareholder value. And Japanese institutional investors, such as insurance companies, banks and pension plans, in selecting their stock investment in Japan has grown to be more sensitive to value and profit.
Individual investors, while largely ignored in Japan. Most Japanese certainly do not want long, brutal bear market to buy stocks. Most of their money in deposit accounts is ultimately pay little or no interest.
Related to institutional investors outside of Japan, the Japanese devils economic issues around a lingering, often to the Japanese stock short shrift, Ishida said. This is so even though many Japanese companies is a global company, there is no more dependent on the domestic economy is bound to the Swiss economy than Nestle (NSRGY) or Novartis (NVS). Thus, according to analysts’ earnings forecasts, earnings within the next 14 12 months trading in MSCI Japan Index.
There is no problem, but Japan still faces enormous challenges. Demographically, its population is one of the fastest growing old in any developed country in the region. Not only is the birth rate is very low, but Japan has never welcomed immigrants. As a result, the country’s population is declining.
How to Invest in Japan
If you can buy sharesTicket Matthews Japan Fund, which is my favorite, but the Matthews fund, under normal circumstances, the performance has been excellent, so the Matthews Asian Growth is a good choice for a wide range of Asian investment. Fund annual cost of 0.98% and 1.14%.
For the fund which is open to all countries pure play Japan, consider tons. Rowe Price Japan (PRJPX). Archibald Ciganer manager since December 2013 has only been at the helm, but since then, an average of 3.9 percentage points per year higher than the MSCI Japan Index Fund has returned 11.3% per annum. Headquartered in Tokyo, Ciganer speak fluent Japanese, and doubles as a stock analyst at T. Rowe Price. The fund’s assets only add another $ 649 million. Fee is 1.02% per year.
For those who prefer exchange-traded fund, XTRACKERS Japan JPX-400 ETF Securities (JPN) is a good choice with only a 0.15% annual fee. The ETF tracking JPX-400, benchmarks, screen for quality companies.
You can have all you need in Japanese foreign diversified stock fund exposure. But if your foreign investment below about 15-20 percent, in Japan, the Japanese consider increasing your exposure. The sun will rise again.