Mid caps looking the most attractive

A sharp improvement in economic conditions resulted in a strong recovery in the Japanese stock market during 2003. Unsurprisingly, cyclical sectors such as steel, airline, construction and wholesale led the gains along with financials. Stable sectors such as pharmaceuticals, food and utilities were the major laggards, reflecting their relatively defensive characteristics. Our outlook for Japanese equities 2004 remains positive. Despite the market's strong relative performance in 2003, valuations outside of the key blue chip stocks remain cheap and at a significant discount to comparabl...