Valuations Are Beginning to Look Attractive for Japanese Equities

TOPIX bounced back sharply after falling to a post-Lehman failure low of 701 on March 12, 2009 and rising two months later to 885 and three months later to 951. On November 24, 2011, TOPIX had fallen to 706, approaching its post-Lehman failure low and closed at 716 today. According to Citi’s Japanese Equity Strategist, Kenji Abe, valuations and corporate profits are looking attractive now and 2012 could well see another spectacular rebound for the Japanese market.  

Though he suggested that the rebound is likely to hinge on the ability of the euro zone nations to formulate an adequate response to the current crisis, we think there is some quick money to be made over these few months. Investors who wish to position themselves for the rebound in general can look at Schroder International Selection Fund Japanese Equity Alpha USD (http://www.fundsupermart.com/main/admin/buy/factsheet/factsheetSDIJEA.pdf). It has an alpha return of 9% over three years and invests primarily in undervalued equity (P/E of 12.2 versus 14.4 of benchmark). We believe investors will be handsomely rewarded if they can catch the bull at the right time.

Disclaimer: This is not an investment advice or recommendation. Investors should seek the advice of their financial adviser first before making any investments.