The world is once again talking about Japan. No, it is not
another horrific catastrophe. In fact, it is the exact opposite.
***All of Japan celebrated the amazing World Cup victory on Sunday
as Japan defeated the American women in what many soccer analysts
call the 'greatest upset in World Cup history'. The resilience of
the Japanese women as they came from behind several times
throughout the match is a telling depiction of Japanese society as
a whole, including its economy.
Indeed, much like the Japanese women, the third largest economy in
the world has proven to be extremely resilient since the events at
the Fukushima Daiichi nuclear power plant.
According to Bloomberg
, the Nikkei 225, the most widely quoted average of Japanese
stocks, advanced 2.9 percent over the past six weeks. The recent
advance in Japanese equities is the largest among all 24 developed
nations in the MSCI World Index. The Nikkei 225 is now within 4.7
percent of its pre-earthquake levels.
***Moreover, Bloomberg reports the surge in Japanese equities came
on the expectation that the Japanese economy will "...expand at an
annual rate of 4.9 percent and 4.2 percent in the last two quarters
Shortly after the catastrophic events
I mentioned the simplest way to take advantage of
the decline in Japanese stocks
- buy the
iShares MSCI Japan Index Fund (
. My thesis right now remains the same.
After the tsunami Japan's was by far the most intimidating
market in the world. The fear was palpable. But the fear driven
decline presented one of the best long-term investment
opportunities in years.
What attracted me the most was the fact that on a valuation basis,
Japanese equities had moved to their cheapest levels
since the bottom of the epic 1973-74 bear market.
The opportunity for outsized gains still remains.
Since I recommended adding exposure to Japan through EWJ, the ETF
has climbed 13.9 percent and looks to push higher as the Japanese
economy climbs out of post-Fukushima turmoil.
***I recommend adding more exposure at these levels.
I expect to see a move that will retest the highs from back in late
February as Japanese production continues to surge faster than
analyst expectations. Just last week, the Trade Ministry of Japan
revised production up to 6.2 percent from 5.7 percent. This was the
fastest month over month growth since 1953.
Remember, the country had been in the doghouse of the global equity
market for years after suffering through the Lost Decade. However,
several months before the earthquake occurred, many investors were
beginning to take a hard look at moving back into the Japanese
Many of the companies spent years during the Lost Decade repairing
their balance sheets while stockpiling cash. And now that Japan is
on the road to recovery from Fukushima all of the hard work
Japanese companies spent building back their balance sheets should
finally pay off. These companies are healthy and poised to grow as
Japan's economy rebounds from the Lost Decade and the most recent
So don't doubt the Japanese and their amazing perseverance. The
women of the Japanese World Cup team won against harrowing odds and
in my opinion, so will the Japanese economy.
The easiest and most direct way to play this recovery remains the
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