Japanese Accelerated Perf Fund Share Discussion Threads

[knowing] 11/3/2011 19:37

A sad day for the people of Japan.

[praipus] 11/3/2011 09:31

Live news coverage

[praipus] 09/3/2011 14:46

Weiss buying more AJG.

[knowing] 07/3/2011 22:26

Any suggestions welcome which can be classed as OIEC or Investment Trusts

BoJ speaks

[praipus] 07/3/2011 12:25

Marc faber Limited, Goldman Sachs and Oakmark International Fund?

[knowing] 06/3/2011 22:40

Yes compared to other markets Japan is quoted as cheapest of the developed world. Some nice funds there to take a look at. Maybe worth adding those to the FUND thread.

[praipus] 04/3/2011 22:55

Some fascinating info there Knowing. Marc Faber buying! I guess its logical that Japan could rally on multipliers from China's growth. Quite a few of the are holding AJG and JAC both of which trade at discounts to NAV... not for long I suspect.

[knowing] 04/3/2011 17:20

March 4 (Bloomberg) -- After a two-decade bear market, now is the time to buy and hold Japanese stocks, Marc Faber, publisher of the Gloom, Boom & Doom report, said.

[knowing] 01/3/2011 18:58

Japan's jobless rate held steady in January and the availability of jobs improved to a two-year
high, adding to growing signs the economy is gradually recovering from stagnation.

[briarberry] 01/3/2011 01:03

Moody's raises flag on Japan debt -- says outlook now negative.

(Bloomberg) -- Japan's public pension fund, the world's largest, said it may become a net seller of bonds to cover payments in the world's most rapidly aging society.

[knowing] 28/2/2011 22:03

TOKYO: Japanese factory output rose in January for a third straight month and manufacturers expect further gains in coming months, a sign that the economy is on track for a moderate export-driven recovery.

[knowing] 25/2/2011 17:18

Going to move some of my funds back into Japan this weekend to take advantage of the recent dip we have seen. There seems to be quite a bit of positive vibes out there presently.

[cerrito] 24/2/2011 22:04

From Today's FT
quote
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Stop looking in the rear-view mirror at Japan

By Peter Tasker

Published: February 23 2011 13:53 | Last updated: February 23 2011 13:53

"What most likely happened was pedal misapplication." So concluded an official of the National Highway Traffic Safety Administration, the US body that has just published its report on the spate of accidents involving Toyota cars.

This time last year, remember, Toyota had to make an 8m vehicle recall. American politicians were in full cry. The families of accident victims gave emotional testimony at congressional hearings, and Toyota's CEO flew to the US to apologise in person.
EDITOR'S CHOICE
Lex: Japanese stocks – peculiarly attractive - Feb-22
Japan's debt gives investors unlikely opening - Feb-22
Fund to boost shareholder activism in Japan - Feb-07
View of the Day: Outlook improving for Japan stocks - Nov-30

The media was quick to draw harsh parallels between the decline of Toyota and the decline of Japan. Now it turns out that Toyota wasn't declining at all. The problem, according to NHTSA, was that "the driver stepped on the gas rather than the brake or in addition to the brake".

Has the global investment community been making a similar error about the decline of Japan?

Underweighting Japan to fund an overweight position in emerging markets has been a popular strategy for several years. The last time you were hurt by not owning Japan was in 2005, which is a lifetime ago in the fickle mind of Mr Market.

Over the longer haul, Japan's 20-year bear market has extinguished investor confidence and created a number of damaging myths that can be used to justify a pessimistic stance. On closer examination, though, Japan is not as uniquely hopeless as its reputation suggests.

The first myth is that Japanese companies have no growth potential. In fact, since the peak of the IT boom in 1999-2000, the Topix index has managed earnings per share growth of 200 per cent – much better than most other developed markets and only narrowly beaten by the Shanghai Composite.

Japan's nominal gross domestic product has indeed been stagnant, but the profits of listed Japanese companies are increasingly driven by global conditions.

Second myth – Japan has a huge demographic problem that will ultimately blow up the bond market. The reality is that Japan has already been greying rapidly for the past 20 years, a period in which bond yields, far from rising, have fallen to their lowest levels in recorded history.

True, the household savings ratio has plunged, but the savings in the corporate sector have risen dramatically as companies invest less. So the economy as a whole still churns out a savings surplus. There is no reason for this to change.

By contrast Europe and China are at a much earlier stage of their demographic crunch, and appear worse-equipped to handle it. In Japan, 20 per cent of people over 65 years old work. In most European countries the proportion is less than 4 per cent.

Third myth – Japan has appalling corporate governance. There is indeed room for improvement, but the recent surge in management buy-outs and other corporate actions (such as the Nippon Steel-Sumitomo Metal merger) suggests change is in the air – though in the usual gradualistic Japanese way.

In contrast, investors who have bought the emerging market story have to tolerate murky deals – such as the 40 per cent of revenues that China's top maker of the alcoholic spirit moutai reserves for Communist party officials – as part of the economic landscape.

Last myth – the global credit crisis has accelerated the marginalisation of Japan. Yes, in terms of local currency GDP, which is how economic performance is usually discussed, Japan was indeed a big loser. It took an 8 per cent hit to output – the largest of any country in the Organisation for Economic Co-ordination and Development – of which it has subsequently recovered about half.

However, look at the picture in common currency terms and the conclusion is very different. Since the subprime crisis kicked off, the yen has risen 33 per cent against the dollar, 48 per cent against the pound, and 35 per cent against the euro.

Compared to other developed countries, as opposed to the emerging world, Japan's global presence has grown, not fallen. The yen is a safe haven, and profits in yen – earned by companies and investors – are more valuable than ever.

Given all this, why have Japan's equity markets been such poor performers for so long? The answer is simple. Japanese stocks were astonishingly overvalued at the peak of its 1980s bubble – more overvalued than the US market in 2000 or Shanghai in 2007.

The de-bubbling process inflicted huge damage on the corporate sector, from which it was finally recovering when the subprime crisis hit.

Today Japan is no longer an expensive market; it is averagely priced or very cheap, depending on which metric you use. Investors should stop looking in the rear-view mirror and make sure to avoid pedal misapplication.

Peter Tasker is a Tokyo-based analyst with Arcus Research

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