So far during 2007, Japan's broad-based Topix Index has lost 12.2%, while the benchmark Nikkei-225 Stock Average has given back 11.1%.
In U.S. dollar terms, the Topix is down 7.6%, the fifth worst performer out of 90 selected global indexes, according to Bloomberg data. The Nikkei is off 6.4%, placing it sixth from the bottom.
On that basis alone, it's probably worth having a look at Japan as a contrarian play for 2008, especially given how well other foreign markets have fared in recent times.
One possible theme: with so much speculative money chasing so many hot emerging markets, an inevitable correction in global equity prices could find at least some investors seeking shelter from the storm in one of the more mature markets in the region -- like Japan.
Even better, if you plot the ratio of the MSCI Japan index relative to the MSCI All Country World Index, the technical pattern indicates the Asian nation's equity market is nearing levels that have served as kick-off points for relative rebounds over the course of the past decade.
One way to play it (depending on outlook and risk tolerance) is to buy the iShares MSCI Japan Index Fund (AMEX: EWJ) and sell (or sell-short) the iShares MSCI EAFE Index Fund (AMEX: EFA).
Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.
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Reader Comments (Page 1 of 1)
12-28-2007 @ 2:37PM
bj said...
Re: USA For Sale, is AMGN being acquired by foreign buyer?