Japan’s government finances are on the verge of collapse, and its economy has floundered for two decades. ...“Japan is by far one of the cheapest markets in the world,“ said Charles de Vaulx of International Value Advisers, a New York-based investment firm. “It’s so universally hated, yet it might be one of the world’s best-performing markets over the next five years.”
Or, then, again, it might not. But the point is that all investors hate Japan.
“So many Japanese companies are well managed from an industrial standpoint,“ he said.
Yeah, but who cares about that?
... An attraction for the bulls is the fire-sale prices. Although the benchmark Nikkei recently hit a nearly 10-month high, it is still more than two-thirds off its peak before Japan’s real estate and stock market bubble burst in 1990.
Shares in Tokyo are also about 20 percent off their levels before the financial crisis hit in 2008 — one of the few major markets that have yet to rebound. ...
Certainly Japan can still give investors reasons for doubt — like the long-term effects of the government’s high debt and aging population. There is also the paltry profitability of companies like Sony, which has averaged a 3 percent return on equity over the last five years while its Korean rival, Samsung Electronics, has surpassed 13 percent by the same measure....
More Japanese companies have also tried to counter investors’ longstanding complaints that companies here hoard too much cash, instead of investing it or returning it to shareholders.
...Some activist investors, meanwhile, are trying to coax Japanese companies into creating more value for shareholders, rekindling an issue that ignited contentious battles between foreign investors and Japanese management in the mid-2000s.