Total performance since we began this service is below:
Eight Week Performance:
Asian MultiCurrency Sandwich portfolio up 30.29%.
Emerging Market Bond portfolio is showing a healthy gain of 20.22%.
Dollar Long portfolio is up 0.78%
Hedge Portfolio up 5% to 0.94%.
Dollar Short Portfolio 1.12%
It is worth noting the reversal of the dollar long portfolio. It has fallen, and the dollar short portfolio risen a bit. Perhaps this is an indication that confidence in the greenback is waning.
One goal of this service is to analyze why these portfolios move, so let’s look a bit at the Asian portfolio and zero in on the Japanese market.
The JI Japanese Equity Fund began at 8678 and in eight weeks has risen to 9799. In the same period the Japanese yen has moved from 115.95 yen per dollar to 116.13. This means that in eight weeks this fund has risen from $74.84 per unit to $84.37. This rise of $9.53 per unit represents a 12.74% in just eight weeks.
You can get more information about this fund from Thomas Fischer at FISCHER@jyskebank.dk
There are a number of reasons why the Japanese stock market is now strong. First, a look at real domestic product growth shows how the Japanese economy, after more than a decade of doldrums, has finally started to show solid growth. You can see this in the numbers.
In 1997 the GDP fell – 0.1%. In 1998 the drop was – 1.3. 1999 numbers barely grew at 0.6%. 2000 looked promising with a 2.8% rise but before confidence could be regained the GDP in 2001 dropped 0.8%. Finally, in 2002 the growth was 1.1%. 2003 it was 2.3% and 2004 was 2.9%. This third year of steady growth has given the investing world hope that the worst of Japan ‘s economic woes are over.
Japan ‘s balance of payments has also risen sharply in the last three years. In 2001 it was 10,652.4 billion yen. In 2002 it rose to 14,139.7 billion yen, then to 15,766.8 billion yen in 2003 and 18,618.4 in 2004.
Yet the Japanese yen has barely risen. This creates a hidden strength in the yen because a growing balance of payments can create buying pressure on the yen. Since our Asian portfolio is leveraged with borrowed yen we do not gain directly from a stronger yen, but we do profit as the yen’s strength is reflected through the stock market.
Investors create demand and higher prices for Japanese shares as they invest in Japanese equities to hold yen.
You can learn more about Japanese shares at http://www.nni.nikkei.co.jp/
The first two months of our portfolios have been quite successful.
Winter is usually a hard time for investments so it will be interesting to see how they continue to do.