re: !! BUY Japan Stocks !!
Aero, I think the time is right for Japan now. For several reasons... first of all,
as Don Coxe put it recently, the last Central Bank to yield has yielded to the
pressures with the BOJ doing its part of QE and accomodation to get the exchange
rate into a range considered fair value by trade partners - in fact Japan has deviated
from this long enough - it's been years - now.
Secondly, a rather resilient Asian market will lift Japanese businesses with it. In fact,
many Japanese listed firms - big and small - have already production, design and marketing
presence in other Asian countries and should be able to mitiagate the undue effects should
the Yen appreciate further.
Next, Japanese companies can refinance with debt ultra-cheaply and many are sitting
on cash. Once the yen should no longer strengthen from here, all companies producing
directly or indirectly for the export sector should be big winners. Not just the producers of
finished goods but even more so those catering to their demands along the supply chain
- i.e. component makers.
Another issue is that the Fukusihma desaster's economic fallout has finally been absorbed
in 2011/Q4 and should no longer produce underutilization among corporate value chain
activities (idle capacity etc.). One caveat might be those sectors exposed biggest to
electricity, such as Alumina producers, but with Nuclear Power stations getting switched
back into production mode over time, this issue might dissipate as well over time - itself
creating even more demand for LNG infrastructure and solution providers.
Inter-company cross shareholdings have been penalized by mark-to-market like
accounting treatement. As a result many subsidiaries are either spun in at a nice takeover
premium or sold off - temporarily depressing the share price but ultimately enabling more
appreciation potential down the line.
On top of this, the political vacuum in Japan creates some interesting opportunities down the line.
The upper house elections last year generated a policy gridlock. This effectively derailed
plans from the ruling (lower house majority) center-left DPJ party to increase welfare spending
and increase business, income and consumption taxes. While the gridlock now in effect just
preserves the status quo, in Japan unlike other places a big realignment of power blocs might
be on the horizon (google for Hashimoto Osaka). It might very well be that this new, rather business
friendly movement might attain the top spot after the next lower house contest. If so, radical devolution
(a la US - states vs. federal level) might be the result of this and a curtailing of the currently implied
subsidies of rural Japanese areas from urban agglomerations (the LDP power base of farmers
at the core of this issue).
best rgrds
CROSSY |
