Ugly and Unloved

By Biggs, Barton | Newsweek International, August 3, 2009 | Go to article overview

Ugly and Unloved


Biggs, Barton, Newsweek International


Byline: Barton Biggs; Biggs is managing partner of Traxis Partners Hedge Fund in New York.

Japanese stocks deserve better.

It's intriguing that as Asia leads the recovery of the world economy and as its stock markets power to new highs, Japan, the biggest economy and market in Asia, languishes. If ever there was an equity market that qualified for the legendary "Four U's" (underowned, undervalued, unloved, and ugly), it's Tokyo.

The conventional wisdom of the world's investors is that Japan is a loser. Everyone knows that its politics are a farce of elderly, bungling aristocrats, that its population is aging and declining, and that its economy for two lost decades has been mired in debilitating stagnation and deflation. Twenty years ago, the Nikkei got to within a hair's breadth of 40,000. Today the index is around 9400. In February it fell to a 26-year low. Talk about a secular bear market!

So why be optimistic now? There are a number of reasons. Japan's stock market is dominated not by cheap consumer exports but by industrial-oriented export firms, many of which produce technology-intensive, precision capital equipment (these stocks have average returns three times higher than their global peers). About half of Japan's exports go to Asia, with 20 percent going to China. Asia, led by China, is by far the fastest-growing part of the world, so Japan is bound to benefit from the recovery now underway there.

In fact, Japan is already turning. Exports and the economy collapsed in the fourth quarter of 2008 and through the first quarter of this year, with real GDP falling an astounding 14 percent. Now the economy has stabilized, and, beginning in April, exports--particularly to China and the rest of Asia--have had a strong revival. The economic consensus expects real GDP growth of about 3 percent in the second half of this year. What happens next year remains to be seen, but optimism about the global economy is clearly growing, and sources report Japanese exports to the U.S. and Europe are rebounding. Nomura, the biggest investment bank and broker in Japan, is forecasting corporate profits in Japan will jump 62 percent next year, by far the biggest increase for any major market.

No one has made any money in Japan in what seems like forever. It is often dismissed as a "value trap," with stocks that seem like bargains but go nowhere. Even Nomura, which just released stock-market-performance targets for the end of 2009, has Japan gaining only 3 percent, compared with 18 percent for the rest of the world. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Ugly and Unloved
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.