Changing Japan grabs investor attention
Written on July 1, 2008
With the rest of the world smarting from the global credit crisis and singed by rising inflation, Japan, rarely a top pick of global fund managers, is starting to grab more investor attention.
Increasingly a target for activist funds and M&A, Japan is also home to many cash-rich firms and investors — themselves unburdened by subprime damage — that are now hunting for their own opportunities abroad.
After a sharp downturn in 2007 and the first quarter of 2008, Japanese stocks have managed a solid rebound in the April-June quarter, helped by expectations that rising prices will offer some respite from deflation, which has squeezed demand and sapped profits for years.
“Japan is increasingly seen by investors as a relatively good market to be in a time of rising inflation and inflationary expectations,” said Jonathan Allum, a London-based Japan strategist at KBC Securities.
Japan’s core consumer price index, which excludes volatile fresh food prices, rose 1.5 percent in May from a year earlier, marking the biggest annual rise in a decade.
The benchmark Nikkei .N225 rose nearly 8 percent in the April-June quarter, compared with the Dow Jones industrial index .DJI, which looks set for a 7.5 percent fall, and the FTSE 100, which appears ready for a 2.5 percent fall.
JAPAN STEPS IN
Losses from the U.S. subprime mortgage market and the global credit crisis have waylaid Citigroup (C.N: Quote, Profile, Research, Stock Buzz), UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) and other Western financial firms, but Japanese banks have avoided much of the damage and have therefore been able to step in with funding.
Filed in: money.