18 Sep Will Japanese equities continue their rise?
It’s always difficult to know in which asset class to invest and how much, but when Shinzo Abe, the current leader of Japan, came to power it was widely expected among well informed investment professionals that Japanese stocks would rise. Over the past year the Nikkei 225 (Japan’s leading stock market index) has risen approximately 85% in local currency terms (less so in dollar or pound terms due to the depreciating value of the Japanese currency (a year ago £1 bought you 125 Yen, but today you can get 156 Yen for the same £1), but this is still a staggering 48.% in pound terms).
You might think this rise was excessive, but is it? You have to look at the underlying reasons why this is happening and what will be the future trend. Will Japan stoke its inflation and see years of increasing corporate profitability and reduced government debt (as a % of GDP)? Does the leadership of Japan see China as such a threat that it will do all it can to bolster its economy and generate growth and depreciation of its staggering public debt by printing even more money?
There are many factors to consider and whether it is right to include any Japanese investments in your investment portfolio will depend on your circumstances and tolerance of risk. To help you decide what risk you are willing to take, or to discuss current investment opportunities or valuations, please contact us to discuss your investment needs. Please check: http://www.astutemm.co.uk/investments or visit our contact page: http://www.astutemm.co.uk/#contact
This article was written by Daniel Weldon, Director of Astute Money Management Ltd.