In the first quarter of 2003, the Japanese stock market hit a 13-year low. Six months later, the Japanese market was up over 20 percent for the year (even more in U.S. dollars) for the best performance of all the world’s major stock markets.
A trend that has been evident in the U.S. for over a decade–corporate management’s focus on maximizing value for shareholders–is just starting to take place in Japan. In the second quarter of this year, Japan’s economy grew faster than the U.S., for the first time in 12 years. Unemployment has just hit a two-year low.
Despite such positive news, Japanese stocks are less expensive than the stocks of Western Europe and much less expensive than the U.S. market, as measured by price-to-book ratios, enterprise value-to-sales, and dividend yields. Thus, this may be the time to invest in Japanese funds or in the stocks of Japanese companies that trade in the U.S.