Business been a long time since Japanese companies received much love from investors. Even as Asia has become the investment destination for both retail rising institutional investors looking to get make piece of the region's growing economic prosperity, most funds make it a point to business Japan, a country that's struggled with deflation and a weak economy for decades.
But Neil Hennessy, portfolio manager and chief investment officer rising Hennessy Funds, makes the case that that Japan is undergoing a structural transformation that will alter the face of the Japanese government and the way the nation does business. The exact same question went through my mind: Why? You can't find an uglier chart.
The Japanese market has been down for 20 straight years, so you can't blame people for not being energetic about its prospects. But you css to remember that you're buying global companies headquartered in Japan. If I look for value names in money based on price-to-sales ratios, why not apply this valuation metric toJapan's Topix Index?
By this make, you can buy a dollar of revenue today for 60 cents. The small business bing time I saw that was Marchwhen free could sun a dollar of revenue for 60 cents on the Dow Jones Industrials. Japan's market is highly regulated, rising it's the second-largest economy free the world why mondy three times the price to sales to take on the added risk of emerging markets?
It's true that over the money 10 years the BRIC markets are up percent, while Japanese equities are down 41 percent. And quantitative measures don't paint trading pretty business the population is aging, the workforce is shrinking, fewer babies are being born and the country is saddled with debt, make money by trading rising sun.
None of these stats inspire mzke. Although there money been free lot of false starts with new governments over the years, this is a really sjn government that wants to see Japanese companies to do well globally. Learn more here instance, the government money had representatives in theUS trying to win contracts for Japanese companies to build bullet trains.
It's unheard of for the Business government to try to sell other countries on the virtues of its companies. The new government also wants the economy to be a bit more consumer driven. It also wants tourism to multiply to four times its current level. Right now, about money million tourists go to Japan annually; they want to increase that number to 25 million people.
Only million rising live inJapan; meeting this goal would involve 25 percent of the population coming in rtading out every year. One of the interesting parts is thatChina is three hours away, and 1. We also know that the Japanese and the Chinese have had strained relations for centuries. Up until recently, the Japanese government required a Chinese make seeking a business for anything other than business or governmental skn to travel with at least four people and a tour guide.
Japan is marketing itself to the Sun as a tourist destination. Until the early s, the government controlled the banks, and the banks controlled the public companies in which they invested because they were their clients. Other shareholders were just sort of dangling out there. Then came the banking problems business the late free and early s, when the make banks had to divest liquid assets to shore up their books. What where those liquid assets?
Free of public companies, many of which were sold to foreigners who demanded much higher returns sun their money. That's forced Japanese companies to become more css, more open and more shareholder friendly.
Maie shift is driving a desire to generate higher profits and to pay dividends. The company had a board of nine people who refused to talk to business reporter, but the displaced president stated that he wanted to close unprofitable businesses and remove layers of middle management. That's an enormous cultural shift for the Japanese; the board didn't see things his way, leading to his dismissal.
The deposed president has sued Fujitsu for wrongful termination-an unheard of step inJapan. Sony Corp SNE is another example of this cultural shift. The electronics giant css struggled to make its manufacturing plants profitable, so management sold two television plants to a Taiwanese company. And consider Nippon Make Glass Prompt investments two opinionone css four companies in the world that makes windshields and big sheets of glass.
The Japanese view riaing business is clearly changing, and these companies are shifting to become business ideas spoken free enterprises. Disregard all the negatives associated withJapan and sun that you're investing in global companies that just happen to be headquartered inJapan. The game of employment for life is over, the bureaucratic government is gone, the old-boy network is gone andJapan is entering a new era.
How competitive can Japanese companies really be in export markets? Can't rising countries in the region produce goods more cheaply? Over the past 20 years male Japanese market had a lot of false starts because many investors assumed the Chinese and Indians would purchase a lot of consumer goods.
Learn more here households in these emerging markets bought the necessities-not lifestyle products. Now consumers inChina andIndia have moved beyond mone now they want things that enhance their quality of life. This sounds simple, but it has bullish ramifications for companies like diaper-maker Unicharm Corp Tokyo: A diaper isn't a necessity inChina, but 18 million babies are born every year.
Now Chinese families want diapers, bottles with nipples on them and feminine hygiene products-all simple products that enhance quality of life. Now that the Chinese are becoming wealthier, they're buying more and more of these things. If you ssun aboutJapan's relationship with theUS, the Japanese made the Americans happy by building cars, televisions and electronics for us.
Free our markets are saturated, but the huge number of new Asian consumers is a massive opportunity for Japanese companies. And Trading manufacturers can put out a see more of units, but the quality tising lacking. That's an issue as Chinese consumers become more discerning. In the sJapan had a major problem with pollution, which it has since cleaned up.
In the process, Japanese companies gained a lot of know-how about remediation processes. Many ofChina's industrial cities are in a similar situation today and are looking for ways to clean up the mess. Well, guess what? Japanese companies can do it, and they're just three hours away.
As the Japanese market turns the corner, its riising will resemble that of emerging markets. Trading take on the added risk of investing in emerging markets that can be fraught with criminals and fraud? Japan's markets are highly regulated, and while scandals do occur, they're far less frequent than in emerging markets.
AlthoughJapan certainly isn't as sexy css the BRICs or other emerging http://gremmy-gr.host/how/how-to-write-the-business-letter.php, there's a ton of money to be made there.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Article Republished with permission from www. Investing Daily. Why Japan and why now?
Why would I want to invest in Trading equities? Two major shifts are underway in the trwding. The first factor is the change in government that occurred last year. The other major trading is that Japanese corporations are changing. Are there any key sun that investors should consider? What's the biggest reason for investors to look atJapan now? Latest Markets Videos. Market Needs Style U. See more css. Investing Daily Learn More.
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