Think Twice Before Pocketing Out All in Japanese Market

What could be worse than investing in an already finally-crippled economy! Wait, we are talking about the birth place of Toyota, popularly known for its self-made just-in-time inventory model, Japan, being imitated by one and all.

Double disaster of earthquake and then swooping Tsunami could have wiped Japan from the world map, had the advanced quake-immune building structures were not laid down by the Japanese since decades. Even though young Japanese kids are pretty  much acquaint for battling such uninvited shockers, Japan was jolted to an almost death on March 11 and even today, after almost four months, early recovery seems to be a far dream.

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Despite being faced with an inordinate financial crisis, the self made Japanese economy is still struggling to get its foot on the ground. Still sticking to its zero-interest rate regime, the Bank of Japan was stunted with the sudden turn of events. Infrastructure probably at heels, life swooned by helplessness and misery at its best, nothing could have worked perhaps at that crucial juncture. With Japanese companies and investors running for encashing their damages, the central bank had to rely on external funding sources.

Shocking drop of 77% in the Nikkei average since it notched up somewhere around 39K in December 1989 is certainly unimaginable. The surmounted public debt coerced Japanese debt-to-GDP ratio to the double mark of 200% in front of 62% of the US. However, not to forget, Japanese stocks were fairly valued always, the earnings still look worth pondering over.

Things could never have gone that berserk had the Fukushima nuclear meltdown had not added fuel to the fire. World over countries went crazy, peeping into their nuclear safety polices and few, even shelving their prospective nuclear energy development plans.

If reports from Metal Bulletin are probed, industry and manufacturing sector was largely hit by almost collapsed raw-material chain network resulting in thwarting the flow of large number of metal producers, including Akita Zinc and Pan Pacific Copper at dead end.

Unwarrantedly, the currency yen pinched the economy, leading to an exponential record high and further, arresting exports.  The Bank of Japan had no option but to enforce liquidity in the system to shoulder the financially withering companies. While there is almost negligible scope for change in its defiant stance on interest rate, any step taken would, more or less, will be dominated by the international clan, led by the United States.

While the shooting yen will makes the Japanese economy to dither further, low value could put the export-dependent economy to come at kneels of other countries. Had the post-disaster impact restricted within the contours of Japan, things would still have been stabilized perhaps, but the thud can heard to all.

“It is entirely possible that some cities wiped out by the tsunami may never be rebuilt”, words of Kenichi Amaki, co-manager of the Matthews Japan fund, but still Japanese have, many a times, proved the world wrong with their incessant dedication targeting ‘standing all over again’ from the end of times.

 

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