Active Investing in Japan

One argument against the negative bias (for Japanese companies) of a strong yen goes something like this: a stronger yen reduces the impact of high commodity prices, such as oil, which particularly helps the likes of consumers and smaller companies. I said as much, stating the obvious, last November (see here). At that time, Chief Cabinet Sec Machimura commented that it is “wrong to think that a high yen is something bad for the Japanese economy.”

That was then, when the yen was safely above ¥100/$1. Now, at ¥99, there’s the reality that corporate profits aren’t going to come in — just consider all the ¥110+ corporate forecasts. continue reading…

The Nikkei 225 has been a marked laggard compared to regional and global benchmarks over the past year. To make matters worse, the Nikkei fails to sustain rallies and faces ongoing sell pressure resulting in new multi-year lows of late (now at 2 years and 7 months). As of Friday’s (3/14) close of 12,241, the Nikkei is off nearly 17% in 2008 and that’s after a 12% loss in 2007.

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