Japan

Jesse Oestreich

Overview – Trade Recommendations

Trade #1 – Mitsubishi Corp. (8058) – Japan’s largest trading company based on market value. Has business groups such as IT & Electronics, Fuels, Metals, and Professional Services.

Trade #2 - Inpex Corp. (1605) – Japan’s top energy explorer by market value. They manage subsidiaries that explore, produce, and sell oil and natural gas.

Bird’s Eye View - Components

The primary indices that track the Tokyo Stock Exchange are:

• Nikkei 225 – An index of companies selected by Japan’s largest business newspaper.

– Inpex, Mitsubishi Corp., Sony Corp., Toyota Motor Corp., Yahoo Japan Corp.

• TOPEX – A capitalization weighted index based on the share prices of First Section companies.

– Believed to be more fair representation of Japanese stock markets due to inclusion of all largest companies on the Tokyo Stock Exchange.

• J30 – An index of large industrial companies maintained by Japan's major broadsheet newspapers.

Bird’s Eye View – Past Performance – 2001 – August 2007

Bird’s Eye View – Past Performance – Since August 2007

Details Behind PerformanceGDP per capita – $42,820 (2010)

GDP per capita (PPP) – $33,805 (2010)

What makes up economy?

– Agriculture: 1.5%

• 15% of global catch for fishing fleet, Apples, Oranges, Rice

– Industry: 22.8%

• consumer electronics, automobile manufacturing, semiconductor manufacturing, optical fibers, and fermentation processes in food and biochemistry

– Services: 75.7%

• major industries: Mitsubishi UFJ, NTT, TEPCO, Nomura, Mitsubishi Estate, Tokio Marine, JR East, Seven & I, and Japan Airlines

Details Behind Performance

Expected GDP growth – 2.9% for 2012

Expected Inflation – 0.2% for 2012

Economic forecast for the future?

“It appears that the economy will escape from the current temporary pause by the middle of fiscal 2011, the year ending March 31, 2012, and expenditures by the household and corporate sectors will increase as exports rise and the pace of increase in household income continues. As a result, the economy will move toward a moderate recovery trend.”

Trade #1 – Mitsubishi Corp (8058)

“Mitsubishi Corp. (8058), Japan’s biggest trading company by market value, rose 3.3 percent as oil and metal prices increased before of meeting of European leaders on the region’s debt crisis.”

“Concerns about commodity prices are easing...The economy hasn’t been hit as hard as it did after the Lehman Shock, so investors are taking another look at commodities, which got beaten down amid all the concern over Europe.”

http://www.bloomberg.com/news/2011-10-24/japanese-stocks-head-for-biggest-advance-in-week-led-by-commodity-traders.html

4-Traders.com Stock Recommendation:

• 9 Buy

• 7 Outperform

• 5 Hold

Trade #2 – Inpex Corp. (1605)

“Japanese stocks extended gains after a report showed China’s manufacturing may expand for the first time in four months.”

“Inpex Corp. (1605), Japan’s top energy explorer by market value, advanced 3 percent to 518,000 yen.”

http://www.bloomberg.com/news/2011-10-24/japanese-stocks-head-for-biggest-advance-in-week-led-by-commodity-traders.html

4-Traders Trade Recommendation:

• 4 Buy

• 11 Outperform

• 2 Hold

ETFs

iShares MSCI Japan Index Fund (EWJ)

iShares MSCI Japan Small Cap Index Fund (SCJ)

iShares S&P/TOPIX 150 Index Fund (ITF)

ProShares Ultra MSCI Japan Index Fund (EZJ)

ProShares UltraShort MSCI Japan Fund (EWV)

SPDR Russell/Nomura PRIME Japan ETF (JPP)

SPDR Russell/Nomura Small Cap Japan ETF (JSC)

Bibliographyhttp://www.bloomberg.com/news/2011-10-24/japanese-stocks-head-for-biggest-advance-in-week-led-by-commodity-traders.html

http://www.bloomberg.com/apps/quote?ticker=1605:JP

http://www.bloomberg.com/apps/quote?ticker=8058:JP

http://www.tradingeconomics.com/japan/gdp-growth

http://en.wikipedia.org/wiki/Tokyo_Stock_Exchange

http://www.bloomberg.com/apps/quote?ticker=TPX:IND

http://etf.stock-encyclopedia.com/category/japan-etfs.html

http://en.wikipedia.org/wiki/Economy_of_Japan

http://blog.euromonitor.com/2011/05/special-report-short-term-forecast-of-global-inflation.html

http://www.investopedia.com/terms/t/topix.asp#axzz1bsOeZ1EP

http://www.murc.jp/english/publ/forecast/2011/201102.pdf

http://www.4-traders.com/MITSUBISHI-CORP-6493521/consensus/

http://www.4-traders.com/INPEX-CORP-489595/consensus/