When the ropes are loosened some time after the election it will bob to the surface
When the ropes are loosened some time after the election, it will bob to the surface.Another change is that the Tories have aged Most of them seem to be even older than I am. Gone also is the bitterness that marked Mr John Major's last two conferences. In a week that has been dominated by military metaphor, they are demob-happy. The representatives are not like this They do not know quite what to think The triumphalism of Lady Thatcher's years has gone The Saatchis no longer give a party. Soon they will be released from the tyranny of the private office and the red box They will miss their official cars, of course. But most of them feel that some benefactor will speedily remedy this deprivation. You may deduce from this that they expect to win the election Not so They are sure they are going to lose It is this which accounts for their jovial manner. They laughed loudly, made jokes, accepted a third glass of wine and said that, yes, on this occasion they would break the rule of their middle years, and have some pudding after all.
But if all goes well, the medium and smaller could easily double in price.o Peter Tasker is Tokyo-based investment strategist for Kleinwort Benson; and author of "Inside Japan" (Penguin).. RARELY have I seen ministers in such a jolly mood as they were in at Blackpool last week. This should remove the risk of another stock market meltdown. Secondly, a new generation of aggressively managed companies is floating on the stock market.But don't expect tiger-like returns from an economy still feeling its way around serious structural problems.Bigger companies are unlikely to return more than 40 per cent by the end of the century.
First, Japanese managements and policy-makers are at last getting to grips with structural problems. Sharp cuts are being made in the manufacturing workforce, and interest rates have been brought down to super-low levels. But unhappily for the foreign investor, they require a much weaker yen, which means currency losses.So is Japan a write-off in investment terms? Not exactly. Most importantly, share prices in relation to profits remain high.
Assuming a return to a pre-bubble relationship between share prices and profits, it might take until the year 2018 for the stock market to return to its all-time high.You can construct more optimistic scenarios. The bubble was inflated by the Bank of Japan, which allowed credit to rip Prices of assets went through the roof. The long-delayed rise in interest rates was the pin that burst the bubble.Six years later, profits have been recovering but are still low. But once-in-a-generation bear markets of this sort do not happen without good cause. And when they do happen they change the landscape out of all recognition.The Japanese refer to their late 1980s boom as "the bubble economy". With the exception of the 1987 crash, the last time the US or UK markets experienced a 30 per cent fall was in the mid-Seventies.Taking the decline in the stock and property markets together, the destruction is estimated at about 15 per cent of total national wealth - a greater loss than in the Second World War.It is tempting to conclude that a stock market that has undergone such punishment must be cheap.
For foreign investors, especially those investing out of weak currencies such as sterling, the damage has been mitigated by the turbocharged performance of the yen. Still, there is no getting away from the fact that the performance of the underlying shares has been exceptionally poor. Over the past five years, the Japanese market has experienced four major falls of 30 per cent or more to less than half its all-time high of 39,000. SO FAR this decade, the land of the rising sun has looked more like the land of the false dawn. Valiant attempts to "call the bottom" of the Japanese stock market have proved premature as shares have been repeatedly buffeted by a series of disasters, man-made and natural. But picking a general fund from a big investment company with a good record that a professional adviser recommends is probably the best bet.q Limit your investment only to money you are prepared to tie up for at least five years, and only to a proportion of that money.Surviving in JapanWhat pounds 100 is worth after five yearsUnit trust poundsHill Samuel JapaneseGeneral pounds 176HSBC Japan Growth pounds 166Martin Currie Japan pounds 184Perpetual JapaneseGrowth pounds 164Schroder Tokyo pounds 184Average unit trust pounds 148Friends ProvidentJapanese Smaller Cos pounds 101Source: Five named funds carry top AAA rating from Fund Research Performance figures from Micropal. But smaller company funds are more geared into Japan's recovery. Kleinwort's Tasker, writing below, believes smaller companies will give higher returns.