Japan poised for reappraisal as a value play

Despite all its good points, everyone still hates Japan. But with subprime fallout set to to lead to downturns elsewhere in 2008, the Japanese market could really come into its own.

Japan has "been on the verge of a turnaround for as long as anyone can remember", says Cherry Reynard in Fund Strategy. But this year "marked the end of the road for many investors".

The market has fallen 12% this year, while the unwinding of the yen carry trade has seen the yen rise to 111 against the dollar from 123 this summer, squeezing exporters already exposed to the ailing US consumer. "The bulls will have to wait a little longer in Tokyo," says New York-based Alec Young, equity strategist at S&P Equity Research on Reuters.

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