Japan Investment

Japan Investment

by Ashley Clark, Director, March 2010

Japan is the World’s second largest economy. It has always been on the fringes for investors, never knowing when is the right time to invest. Huge levels of public debt, a strong Yen and negative demographics are the usual concerns.

However, indicators for investing are improving, with many predicting a fall in the Yen this year, which will obviously stimulate exports. Being close to the growing Asia Pacific region could be beneficial, coupled with the Japanese companies being used to working in a low growth, low interest rate environment.

Even now, investors are concentrating on the growing markets of China and Brazil and are still holding back from investing in Japan.

Following Government stimulus measures, in August last year household spending was up over 2.5%. These figures indicate what is to happen with personal spending, which accounts for over 60% of GDP for Japan.

There have also been political changes in Japan with the Democratic Party of Japan taking over from the Liberal Democratic Party. Hopes are high for a central Government shake-up and more reforms for corporate governance.

Our opinion, and those of many market commentators is that investing in Japan again could be profitable but should not e on the basis of a ‘leave it for the long term’ strategy. If you invest and make profits, take those profits out. Market timing is everything and the key is not to be greedy.