When it comes to Japan, political change should translate into long-term profits for global investors.
Mention Japan and many people think of Geisha, castles and samurai. Mention investing in Japan and the image of an impenetrable wall comes to mind. I’ve been extremely fortunate to have seen all of this firsthand – and not just once, but on a pretty consistent basis for the past two decades, when I’ve been here as a businessman, a resident, and – most recently – as a husband and a parent.
The recent devastation in global stock markets makes US bears look relatively cuddly. Japan’s Nikkei index is hitting 26-year lows. And the resurgent Yen is creating even more problems for Japanese exporters. Andrew Snyder says companies like Sony (NYSE:SNE) and Toyota (NYSE:TM) face a very difficult period ahead.
– The Nikkei 225 got wiped this morning in Asian trade. Japan’s benchmark index lost another 11% of its value. It is now touching 20-year lows.
– Other world markets India dropped 9.6% as Mumbai opened for business. South Korea fell as much as 9%, Hong Kong by 9.7%, Australia by 8.4% and in Singapore lost as much as 8.4%.
– European equities “collapsed,” according to the Financial Times, “left vulnerable after a dramatic late sell-off in New York extended the sustained losing streak on world stock markets.”
– As rumored, the world’s central banks have announced a coordinated rate cut to try to juice up the frozen credit markets. The Fed has cut its key lending rate by a half point to 1.5%. The European Central Bank trimmed cut its key rate to 3.75% from 4.25%. The Bank of England cut its key rate to 4.5% from 5%.
– According to a joint statement by the participating banks, “inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices,” while “the recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability.”
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Earlier this year Bush and the boyz pumped $150 billion into the consumer economy by way of their much-hyped stimulus check package.
Despite Bush’s best efforts the National Retail Federation says US retailers will see their slowest holiday sales growth this year since 2002.
But it isn’t all doom and gloom in the retail world. Stephanie Grimmett says Japan’s Fast Retailing (PINK:FRCOF) has ambitious growth plans in fast-growing emerging markets. FRCOF’s share price is on a down trend. But it will likely bottom soon.
The Daily Reckoning’s Bill Bonner says the Fed’s bailout strategy is eerily reminiscent of Japan’s response to its own financial crisis in the ’90s. In Japan’s case, massive government intervention simply dragged out the country’s correction; 18 years on and Japanese stocks are still way below the pre-crash levels. Bill says the US could be looking at the same fate…
The conflict between Russia and Georgia became quite a controversial topic this week. Strong support has been voiced for both sides, and many have begun to question the United States’ involvement (or lack thereof).
Emerging markets are the place for investment bankers to wheel and deal during the next couple of years, says Martin Hutchinson in Money Morning.
Emerging markets’ share of investment banking revenue has increased in both percentage share and in total value over the past few years.
Of course, if you want to buy into this dynamic growth business you need to invest in emerging markets investment banks. Martin has picked three that are worth a look…
Japan - the world’s third-largest economy – is on the brink of its first recession in six years.
According to a report in The Daily Telegraph today, Japan’s gross domestic product contracted at an annual rate of 2.4% in quarter that ended June 30, after expanding 3.2% in the first quarter.
The news sent Japan’s Nikkei 225 down the most in a month.
Taipan Publishing Group’s Adam Lass says it’s a good time to short iShares’ Japanese ETF, EWJ…