I am fairly heavy in JPK...it's a Nikkei fund offered by Morgan Stanley....It took a pumelling in May, and I am thinking that the Japanese market may be in for further declines. I would be curious to hear the opinions of others.
Why do you think it's in for further decline?
I am concerned about a potential further weakening of the dollar due to the huge deficit and political issues (currently in Iraq and soon in Iran). When the dollar weakens against the yen, Japanese goods will be more expensive in the US and their exports will be hurt. Also, I am concerned about the price of oil. I believe Japan imports about 100% of its needs. Finally, there is the old saying: The trend is your friend.
Hi JFR101,Currency exchange rate against the dollar usually does not affect the market much since Japan has a large volume of both imports and exports. Usually a stronger yen also indicates a strong economy, while a weaker economy leads to weaker yen.The recent drop was mostly due to effects of bad markets overseas.Many clues point that the immediate Japanese economy has a bright future ahead as Nichi-gin gets ready to raise rates and many jobs are being created. Businesses are reporting great earnings -- even government functions are reporting large revenue for the quarter. Japan is finally entering inflation, too. (Right now the only country who celebrates inflation?)Nikkei will still go down if world markets take it down with them, but otherwise I see no sign of immediate decline for now.
Thanks to Murakami's arrest I take that back, but now should be a good buying oppurtunty for Japanese stocks and funds.
I think Murakami's arrest for the so called insider trading is a load of BS and is going to damage foreigners' view of the Japanese market. Regulators are obviously picking on people who are against the establishment. I heard Lehman Bros is about to get done in as well for its role in the MSCB last year. Obviously Fuji TV is protected by some very powerful traditionalist and what happened last year simply cannot be forgoten.Although the Japanese market seemed to be making progress in terms of regulatory practises and companies divesting themselves of each other, it seems now regression has taken over and with that, the decline of share prices. If the FSA and the government want to boost Japan's markets up to levels in other Western countries, they need to take an unobjective view of the situation and support shareholder activism. To this end, jealousy in the Mininstry of Finance over how much money Murakami is making should not dictate any regulatory actions (as rumors suggest).I believe the Japanese market is headed back down below 15,000 and only when a clear view that some companies support shareholder activism is made - which could be as AGMs in a couple of weeks - will investor confidence return to the market. It is also unnerving that China dropped almost 5% today, I hope we are not on the edge of another Asian crisis. If we are, Japan will be much more deeply affected than in 1998 as it has alot more assets in China now than then and China has also become its number one trading partner. I don't think it is a good time to buy in until there is more stability in the market. That is my two centsT
Regulators are obviously picking on people who are against the establishment. I heard Lehman Bros is about to get done in as well for its role in the MSCB last year. Obviously Fuji TV is protected by some very powerful traditionalist and what happened last year simply cannot be forgoten.Murakami did commit insider trading on his own admission (and there are irrefutable evidences). Whether he (or the "new establishment", for that matter) was picked on by regulators or not can only be pointless speculation. Will foreigners' view of the Japanese market be better if the law enforcement turns a blind eye on this insider trading matter? We got to be objective even though we desperately want Japan to change from its arcane practices.
Yes, but looking at the facts. He knew Livedoor was going to buy Fuji shares in advance. That in itself is not insider trading. It only become insider trading if the company that buys the shares, buys more than 5%, Murakami was guessing 2-3%, which would not be insider trading. Obviously Murakami could be full of it and he did take advantage of the situation by buying shares, which he later unloaded. He took a risk and he knew it could get him in trouble, but I am willing to bet what he did was/is not that uncommon in the industry, especially amongst Keiretsu firms.It is speculation about whether regulators are picking on the "the new establishment", but Western media in general believes it, while Japanese media tend to propogate the other direction. If you read the Nikkei Net after the Livedoor incident, I wasn't sure if it was free press or propoganda for the right as there seemed to be little objectivity in the articles written as to whether Horie was being treated fairly or not. Horie is guilty, until proven otherwise. Perhaps this can all be summerized as 'growing pains'.
From growing up in Taiwan and noticing similar trades with Japan and similar form of economy it may seem that Japanese imports may get more expensive but in reality many Japense parts go into American products, and also many "Japense" products are actually manufactured in the United States that are for sale in the United States. The big thing I find amazing is that in Japan limited raw resources has almost never limited this countrie's potential. In fact, it has made the induustries in japan more efficient as well as the people. The Japanese strive on quality and will pay top dollar for it and this is noticed in the struggles of Wal-Mart (see Fortune Magazine article). The only thing that could hurt the economy is national pride, which in the past has caused banks to loan on good faith and cause stocks to be overvalued which caused for the great adjustment of the 80s.
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