Olympic-sized op­por­tu­nity

Finweek English Edition - - INVESTMENT - MARC ASH­TON

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.

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