Here's something interesting an article in the FT that is supportive of the Japanese stockmarket but that isn't written by me. Leo Lewis is looking at Japan and seeing some good stuff.
There are record dividend payouts and there is a guaranteed buyer (the Government Pension Investment Fund and the central bank are huge buyers). There's a big new buyer in town too with the introduction of negative interest rates, buybacks are suddenly running at levels well above any previous year (this by the way was exactly the mechanism by which very low rates in the US have given us equity bubbles). Add up the total these three players will buy this year, says Lewis, and you come out at around 23bn.
There is also rising evidence that Abenomics is not dead (or at least, says Jonathan Allum in his Blah newsletter, that it is refusing to lie down). Most recent data has been full of pleasant surprises. So why then are foreign investors selling? Lewis says they have sold around 10trn of Japanese stocks in the last 12 months alone.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
It seems that "all they can see is ugliness". That makes some sense there is uncertainty around zero interest rate policy and around the huge intervention into the markets by public bodies. But in the end, stock prices come down to two things price and the flow of money. Japan is not expensive (down 15% in the last year) and certainly not relative to the likes of the S&P500.
Our old friend Hugh Hendry of Eclectica is with Lewis on this. He is buying. People have been predicting that the currency would collapse for years, he told Citywire Wealth Manager. But it hasn't happened. Nor has the long-forecast collapse of the bond bubble. What's more, reckons Hendry, it isn't going to happen something that gives Japan pretty much free rein to keep on printing money and buying assets in its bid to create some kind of inflation. All good for equities.
How should you get in? We've looked at lots of different funds in the magazine over the years, but at the moment I am particularly interested in one of the things mentioned above record payouts to shareholders and hence in the launch of various new funds around this theme.
One of the newest is the Baillie Gifford Japanese Income Growth Fund. Its starting portfolio yields 2.5% (very good for Japan) and if you get in in the next three months you will pay a management fee of 0.25% for the next 12 months (after that it goes up to a still reasonable 0.65%). Baillie Gifford has an excellent record in Japan (I sit on the board of the Shin Nippon investment trust which has delegated its fund management to them) and that, I think, makes this new fund worth a look particularly at this price.
-
Water companies blocked from using customer money to pay “undeserved” bonusesThe regulator has blocked three water companies from using billpayer money to pay £1.5 million in exec bonuses
-
Will the Bitcoin price hit $100,000?With Bitcoin prices trading just below $100,000, we explore whether the cryptocurrency can hit the milestone.
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
