Analyst: Japan's a Good Long-Term Buy
Japan’s Nikkei Index has had its longest bull run since 1989, ending 2006 up 7%. Unemployment in the country is at an eight-year low, and despite a possible rate hike in the spring Japan is reclaiming its leadership position in the global economy. But is it too late for investors to get a piece of this growing economy? President of Matthews Asian Funds Mark Headley says no.
“I think what you have in Japan is a very long-term, profound restructuring story,” Headley says, “coming out of the morass of the ‘90s and all the disfunction of the financial system and a property market that fell 14 years in a row.”
It’s not a “mad growth environment like you see in China and India these days,” the analyst says. Everything happening in Japan is moving a slow pace, which gives investors time to build a position and look for good companies.
Headley is more worried about bureaucrats than rising interest rates. In fact, a gradual climb in rates is a sign of a healthy economy, he says. But if the same stifling mentality that has ruled the troubled Japanese markets over these past years continues, that could have a serious negative impact on the economy. Headley believes that the continued deregulation of the market is the best strategy for growth in Japan.