NANI なに?!

Nani is the first Japanese word that I actually learnt from watching animes. It simply means “what”.
 
This article shall do a short update and reflect on an article previously written on the Japanese market. In short, I was quite keen on the Japanese market back in 14 September 2009. The performance of Nikkei is currently close to breakeven on a six month basis since September 2009. Looking from this point of view, it is everything short of being outstanding. Returns are bad when you compare to markets like Dow.
 
Japanese market, the Nikkei, has a weird history. It has been down for almost 20 years. It is inversely related to Yen. Even though Japan has the best technology in the world, their economy is still in the slump. Every economist will probably tell you to ignore the Nikkei.

However, I’m seeing good signs about Japanese market. The fall of Japanese airlines, JAL, is probably good news in my opinion simply because the market ignores it. What’s next after bankruptcy? More bankruptcies? In my view, for those who love economic cycles, bankruptcies mark an end to a cycle. I’m also seeing significant amount of strength shown in the Nikkei when other markets are not doing well and when Yen is going up. These are weird signs but observations that I always look out for to understand the market sentiment.
 
If you want to bet emerging markets, why not bet a fallen market that is full developed? A high technology savvy market where iPhones or Blackberries can’t even penetrate! Enough of China and India or even Africa, I can see really efficient people in Japanese, in their system like transport, creativity in their business ideas and etc. There are so many reasons for me to support Japan. On a side note, I love their mangas!
 
Alright!
 
Before you start shouting, “Nani!?” Take a look at these lines from famous people in the industry recently.
 
Byron Wien, vice chairman of Blackstone Advisory Services is bullish on japanese stocks and said that while Japan is not in a boom, things are getting better:

“I would definitely start buying now. Everybody who could sell Japan has sold Japan. Everybody is on one side of the boat. My view is that we have a pretty good chance of having this one be the best of the major industrialized markets. It’s not a boom, but things are getting better.”

I really like what Byron has said. In some ways, it is also seeing from ground zero. It sounds really fuzzy that you buy into Japan because everybody is on one side of the boat but it is unarguably the most important factor behind the Nikkei call. You will go nowhere trying to dissect the economy. Many tried, but failed. 
 
Other market strategists have been turning bullish on japanese stocks recently and Marc Faber considers the japanese banks to be the best contrarian play of 2010.
 
"You should buy Japanese stocks and Japanese banks. This is the absolute contrarian play. Nobody is interested in Japan, all the funds have withdrawn money from Japan, they have given up on Japan. I guarantee you the economy will not do well, forget about the economy, the population is shrinking, but you can have an economy that does not do well but the companies do well. There is a big difference and I think the Japanese banks are very depressed. All the banks in Asia have actually recovered very strongly but not the Japanese banks so as a contrarian play I would look at that."
 
"I think both the US markets and Japan this year might outperform emerging markets," he said.

Source: http://decodingwallstreet.blogspot.com/2010/01/byron-wien-bullish-on-japanese-stocks.html
Source: http://marcfaberblog.blogspot.com/2010/01/most-attractive-play-right-now-could-be.html

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