Betting on Japan's assets

Article Abstract:

Japanese stocks have tended not to perform well and institutional investors are being advised to stay away from Japanese stocks. This could mean that the Japanese stock market has reached its low point, though there is no certainty that this is the case. Some analysts see Japan's economic problems as likely to continue over the longer term, but the Japanese economy has assets that produce output which has value. The Japanese stock market will move away from its bear phase when investors see economic growth as likely to resume, and growth could be above United Kingdom levels.

Approaching the stationary state

Article Abstract:

Japanese equity dividend yields are higher than bond yields and this has not occurred in a major stock market for some decades. Investors have become more risk averse, while dividend growth is likely to be subdued due to drops in consumer prices. Real dividend growth could also be reduced, the market believes. Return on capital is low and there is little incentive for companies to invest. This in turn limits possibilities for long term growth, and dividend yields may remain at less than bond yields.

Interest Rates, Government securities

Japan: battling on

Article Abstract:

The Japanese stockmarket is affected by speculation about possible interest rate rises. The Bank of Japan has stated that rates are not due to rise, and has intervened to keep rates low. Financial markets may have incorrectly assumed an early rate rise which could explain a faltering in share prices in May 1996. The yen has dropped in relation to the US dollar as it has become apparent that interest rates are not set to rise in Japan.

Economic aspects