Thursday, Jan 17, 2008
Down 24pc from its peak
The Telegraph: Japanese stock market plunge rattles Fukuda
The Nikkei index has dropped 11pc in barely two weeks, recording the worst start to the year since 1945.
Posted by sold 2 rent 1 @ 07:55 AM (452 views) Add Comment
6 Comments
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1. sold 2 rent 1 said...
I wonder when Merryn Somerset-Webb will admit she has this one wrong - bigtime.
http://www.thisismoney.co.uk/investing/article.html?in_article_id=429018&in_page_id=166
Japan's debt was not properly destroyed to a point of toal despair. Until this happens there is no proper recovery.
2. Rainbow said...
They will probably have to drastically cut their interest rates, erm! what are they at the moment?
3. sold 2 rent 1 said...
Could the March 2008 low in the Armstrong Economic Confidence Model be about the Yen peaking or Japan's stocks hitting a bottom.
4. converted lurker said...
sold 2 rent that's a great graph, thanks for that, back on track eleven percenr drop in 2 weeks is huge news....not in the UK or US obviously...
5. japanese uncle said...
Foreign investors are reportedly selling Japanese shares to realise profits for the moment, taking advantage of the current surge of JPY. So the current slump is not believed to be reflecting something secular about the Japanese economy, although superficially you can argue the US recession is a bad news for the Japanese manufacturers, which however actually no longer rely on the US market as heavily as it did years ago. Anyway Japanese financial institutions are much less affected by the sub-prime crisis than their counterparts in the US/Europe, thanks to their little more cautious approach to the risks of this nature, with bitter memory of the last collapse of the bubble still vivid and fresh. Besides 1,500 trillion yen (GBP 7.15 trillion) personal wealth is an encouraging stabilizer of the economy (It even increased as a whole even during the so called lost decade). On the middle-to-long term basis Japanese shares are good buy (as good as gold), in view of the fundamental strength of the industries, let alone the exchange gains expected from the JPY appreciation for the next few years.
As mentioned earlier, Japanese economy is not particularly rosy at all, but has much better prospect relative to US/UK and Europe (save Germany), simply because of the absence of froth, while the spectacular collapse of the gigantic Chinese financial/property bubble is as certain as the Sun rises tomorrow morning.
I have no interest in share-trading, though, and my comments just reflect the viewpoint of an amateur economist.
6. drewster said...
@s2r1: I agree - Merryn should own up to calling this one wrong! I blindly followed her advice up until December, at which point HPC contributor Japanese Uncle pointed out some of the less flattering features about the Japanese economy - mainly the rapidly ageing population - which made me reconsider my holdings. Let's just say I'm glad I sold when I did!
@JU - Thanks for your advice back in December. I can't find the exact post, but it sure seems to have saved my bacon! For the foreseeable future, it's hard to know which way things will go. If demand in the rest of the world collapses then Japan's economy should fall too. It certainly does seem cheap and getting cheaper though - it's just a matter of timing when it hits rock-bottom.
In the longer term Merryn could yet be right. Japan shows little of the debt problems faced by much of the rest of the world. Personally I'll wait until things have bottomed out: once we've seen several months of rising Nikkei, I'll feel safer jumping in again. Germany might be a good bet too - their stockmarket looks a bit high, but apparently property in Berlin can easily be bought for five-figure sums.