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Investing in Japan
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Hilary hames
Posted: 21 January 2013 19:09:35(UTC)
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I have never invested in Japan but Japanese funds have been making the highest gains over the last few months. I read an article last night, maybe City wire maybe Morningstar that talked about the difference between the hedged and non hedged funds re currency but annoyingly I cannot remember where it was or the funds it mentioned. Anyone any idea? I think that one type of fund was safer than the other although not going to grow so fast. I think that GLG Japan Alpha(?) was a recomendation
Anyway, that be as it may,its the start of the Bank of Japan's two day policy meeting, after which it might unveil aggressive new policy measures – at least on the monetary policy side. Ihave read today that investors have taken profits, does this mean that the decision taken could have adverse effects on shares and therefore funds? I had presumed that if it was some sort of QE then shares would go up?
Sorry if this is alll very vague, am very new at this game!
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John Osborne
Posted: 26 January 2013 16:20:08(UTC)
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Hello Hilary,
Their market remains undervalued and over the years has promised much but delivered little with a very up and down performance.
However, the latest prime minister seems determined to print even more money to boost their economy. The resulting devaluation will boost their export industries and economy despite the aging population.
I invest in Japan myself, my wife and myself have modest holdings in the Bailie Gifford investment trusts which have gained a fair bit in the last year or two making up for previous losses. The question is, of course, what will happen in the future, but I am not selling yet (for all it is worth- (very little).
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philip gosling
Posted: 27 January 2013 09:04:55(UTC)
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Well Japan is not for widows and orphans.

A New Dawn has been forecast every year for 20 years and rarely appears. I invested in Fidelity Japanese Values over 20 years ago when it started - to take advantage of the bottom of their stock market it having gone from 40,000 to 10,000 and where is it 20 years later always hovering round the 12,000 mark.
So unless you have a well balanced and comprehensive porfolio go for 'steady eddies' like Europe, US or UK and use ETF Trackers to minimise costs and maximise profits over the years.
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Micawber
Posted: 28 January 2013 00:36:52(UTC)
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Japan's debt problems as % of GDP are double even the UK's. The economy and population are ageing, many of the companies mature or past maturity and their approach rigid and hierarchical. It's getting to be clapped out. There are worsening political issues with China. The yen is a problem and changes in policy to depreciate it / print money, which will favour exports, are probably the main reason for the increase in share prices over the past few weeks. But over the year you risk exchange losses that offset market gains (unless, as seems quite possible, the pound depreciates even more). I've done poorly in Japan over the last ten years and have reduced to just a small investment remaining in units (Henderson), which I shall sell in a few weeks when the present little surge tops out.

I am looking at an Australia ETF as home for that money on a five year view.
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John Osborne
Posted: 28 January 2013 00:51:47(UTC)
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Australia might be a bad choice if their dollar depreciates with the slow down in China. Also property bubble. Why not an Aberdeen far east fund?
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Micawber
Posted: 28 January 2013 01:26:09(UTC)
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China picking up again. Australia stable, well-placed, no regional disputes. Relatively developed, debt / GDP ratio remarkably low among more developed countries. Very large shale oil/gas reserves lately found, albeit up-country; plenty of resources. Currency prospects look stronger than ours. Index relatively high, but on a medium term view looks to have upside. Fair dinkum.

Except for property bubble. There are property bubbles in many countries. In the case of Australia:
- MSCI Australia index comprises 47% financials. Exposure to residential property finance is about 50% of the value of banks' assets.
- In Australia household indebtedness no higher than UK, Canada, South Korea and has plateau-ed in last few years.
- prices have reduced slightly in several Australian cities over the past year

The judgment is: will there be a crash or, in an otherwise fairly healthy economy with plenty of room for fiscal management by a government that is not too heavily indebted, will house prices drift lower in real terms for a number of years (as in UK) without a crash that disrupts the economy.
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