ONE OF the positions that I have had success trading over the last year has been the Japanese Nikkei. Japanese markets have done nearly 60% in the last 12 months but there are two developments that can’t be ignored. First, Japan is creating a perfect storm when it comes to investment markets with accommodative fiscal and monetary policy, the winning of the 2020 Olympic bid and an export-driven economy, which is likely to benefit from efforts to weaken the yen.
Second, the most telling stat for me (courtesy of Bloomberg) was that companies on the Japanese Topix Index (Industrial stocks) were trad- ing on an earnings multiple of around 14 times compared to the long-term average of 28. In other words, Japanese stocks are starting to see real earnings growth coming through.
The Deutsche Bank Japanese X-Tracker (DBX-JP) exchange-traded fund (ETF) is an option for those wanting access to this market. Alternatively, you could look at using a spread trading instrument on the Japanese Nikkei but the ETF might help those who hate intra-day volatility, an aspect of this market, and maybe try riding the Nikkei up to 15 500.