Editor's letter

A country that is safe and not expensive

Political stability usually comes at a price these days, says Merryn Somerset Webb. But there is one country where investors needn't pay over the odds.

Strong and stable government is hard to find these days. It has gone from the US (for now at least). It has all but disappeared in the EU, which as Roger Boyes points out in The Times, is "restless and splintering".

Eastern European political leaders are "casually rejecting the old dream of Europe" and opposing the euro, further integration and EU migrant quotas. And western European countries are clear that they aren't going to tolerate a new world of fiscal transfers. Countries are also falling out internally. Everywhere "thriving provincial cities are in a constant state of tension with their national capitals and with Brussels".

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The UK is more stable than the EU being a long-term union with what Nigel Biggar, regius professor of moral and pastoral theology at the University of Oxford calls "a depth of multinational solidarity" of which the European Union and a few other European countries can only dream.

However, our current political situation, while democratically interesting, is hardly ideal. And with that in mind, I'd like to suggest that you head to the British Museum. Take a Momentum supporter with you and visit the small exhibition in room 69a The Currency of Communism.

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That the exhibition exists at all is interesting in itself. If the state provides all goods and services and ensures that they are shared out equally with the happy co-operation of the population, what need could anyone possibly have for cash? So the fact that none of the 27 self-declared communist states seen so far have managed to eliminate money is proof that communism just doesn't work.

Capitalism (which requires a medium of exchange) always hangs on. Anyone in any doubt should skip the bank note bit of the exhibition and head straight for the display of a ragged Russia avoska the "maybe bag" that everyone carried in the Soviet Union in the hope that they might come across something to buy. Until everyone who thinks that a bout of intense socialism could cure the UK's ills has considered this, our political stability looks likely to remain fairly elusive.

Long-term investment should transcend short-term political concerns, of course. But when most markets are very highly valued, we have to put it into the mix (see Edward Chancellor's article this week).The good news is that there is one place that is neither expensive or politically dodgy: Japan, where Shinzo Abe has just won a third term, giving him the power he needs to carry on with his economic reforms. Valuations are still reasonable, dividends are still rising, corporate governance improving and almost no one needs to visit room 69a. That's as good as it gets these days. Japan remains our favourite market.




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