Japan Equities Now?

by | Aug 28, 2000 | Archives

Reports are filtering in from various advisors that suggest Japan may be the next hot equity market. For example Jyske Bank in its latest equity reports wrote:

“We have increasing confidence that the Japanese economy is at last gaining momentum and therefore we consider upgrading our recommendation from neutral to overweight at the expense of Europe. Risk tolerant investors should already now consider an upgrading of Japan. ”

Two Japanese shares featured in Jyske's report include Fuji television which rose 8.2% after Morgan Stanley decided to include the share as the only new additions to the Morgan Stanley Capital Index. The other share is Internet Initiative Japan which saw higher tan expected sales (Yen 7,246) last quarter. Jyske believes that it this company has the right strategy to achieve largest possible market share during a period of massive growth.

For investors who want to limit risk Hong Kong Shanghai Bank has created a guaranteed investment offered by its HSBC International Capital Secured Growth Fund. As little as $5,000 can be invested. After a 3.5% up front sales fee, The balance is invested into the main equity indices in Japan, Singapore, Hong Kong and Australia. You get 70% of the growth and your capital (96.5% of it) is guaranteed. This is a safe way to enter Japan, but of course you give up 30% of the profit potential, plus this particular investment is also in other Asian countries.

Another important point to remember. Japan's market for the past 15 years (Since Black Friday October 1987-when Japan's market jumped as the US crashed) has run almost exactly opposite the Dow. As U.S. markets slow down, this could bring strength to the Nikkei.

Keep and eye on Japan and good investing!