The Nikkei Stock Average will surpass 50,000 yen by 2013. Japan may be about to become a global hero.
This is the opinion of Emin Yılmaz, 42, an investor from Turkey. After graduating from the University of Tokyo in 2006, Mr. Yılmaz joined Nomura Securities, where he worked in institutional investor sales. Currently, he is an up-and-coming economist who is highly regarded as the head of the “Compound Eye Economics School. What kind of scenario would cause the Nikkei 225 to nearly double in just three years? First of all, he believes that the bubble between the U.S. and China will burst.
Both the U.S. and China are already experiencing economic slowdowns, while inflation is rising due to a shortage of goods. In the U.S., monetary tightening will directly hit and the economy will crash. The NY Dow should drop visibly this fall.”
The U.S. is forced to endorse a strong dollar and a weak yen in order to control inflation. This is the source of Japan’s current woes, but in the medium term, Emin argues, it is time for Japan to turn things around.
The weak yen has made it easier for foreigners to buy Japanese stocks. The invasion of Ukraine has led to a series of asset freezes of key Russian officials, and big wallets like Saudi Arabia’s oil money are now in full swing, trying to flee their assets to Japan. From the Japanese perspective, it seems that the Japanese yen continues to lose value, but Japan has personal financial assets estimated at ¥2,000 trillion. Much of this is in savings, and yen deposits in times of inflation will only diminish assets. Japanese people have been saving only with their ‘deflationary brains. This should lead to a shift in thinking to an ‘inflationary mindset’ that says, ‘Buy now, or else you will lose money.
A weak yen raises stock prices. With the yen’s depreciation, stock prices will rise.
From a long-term perspective, I call it “MINK,” meaning M (Mitsubishi Heavy Industries), I (IH I), N (JGC Holdings), and N (JGC Corporation). I recommend investing in M (Mitsubishi Heavy Industries), I (IH), N (JGC Holdings), and K (Kawasaki Heavy Industries). They are also resistant to inflation because they are involved in the defense industry and other businesses that are not affected by the economy. Companies that are not cash-strapped and pay strong dividends are good targets.”
Even if Japan is going to be the sole winner, it seems that it is still important to be conservative with your investments.
From the July 15, 2022 issue of FRIDAY
Photo by： Shinya Nishizaki