James Robinson, manager of the Witan Investment Trust, is positive on the prospects for Japan, with ...
James Robinson, manager of the Witan Investment Trust, is positive on the prospects for Japan, with signs of a government move to reinflate its economy evident.
Robinson is overweight in the region as he believes the market, which has been downtrodden for more than a decade, is due for a change.
He says Japan could perform relatively well because there are now signs the government is making moves to address its problems.
He adds that the appointment of a new governor for the central bank in March should help the situation.
However, Jeremy Tigue, manager of the Foreign & Colonial Investment Trust, disagrees with this assessment and is underweight the region. 'Japan has the second biggest economy in the world, but it has issues at the moment such as deflation. We have put more into Asia where we feel there should be better growth opportunities over the long term. But, again, it is also risky.'
According to Charlie Aitken, managing director at CA Asset Management, figures show that in January, Japan's rates fell below zero for the first time in the country's history. The overnight call rate on funds traded between foreign banks fell to -0.01%.
While the outlook for Europe is generally not good, according to Robinson, he is still slightly overweight the area because of its strengthening currency.
Tigue adds: 'In Europe, there are a lot of problems, but with the single currency it gives opportunities for the future. Despite all the negatives about Europe, there are a lot of possibilities and positives under the surface. The fact there is a single currency makes it easier to trade and therefore, hopefully, it should increase the level of trade to the region.'
Aitken says the UK is suffering at the moment as a result of record debt levels and further warnings by the FSA of a possible housing collapse. The UK market saw its large cap index lose 5.7% in the week ending 24 January, bringing its level to below that of the 2002 low.
According to Bloomberg figures that was on 24 September 2002, when the FTSE fell to 3,671.
On 27 January, the FTSE 100 hit an eight-year low of 3,460.
The fate of Europe's other largest markets, France and Germany, followed that of the UK, losing 5.2% and 6.9%, in euro terms respectively, for the week ending 24 January, notes Aitken.
Robinson is underweight the US, as he feels valuations are relatively high. There has been concerns about the US dollar for some time, as it has been under pressure. The US also needs to finance its current account deficits.'
Aitken also believes US valuations are too high with company debt levels at unsustainable levels and profit margins still under pressure.
He says: 'The surge witnessed in the first couple of trading days of the new year seems light years ago and the closing levels of the week ending 24 January saw the Dow Jones and S&P 500 in negative territory for the year to date. The Nasdaq was more defensive, losing just 2.5% over the week, changing to a 0.5% gain year to date.'
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