As of late, I have been intrigued by Japan. It is a part of the world that investors seem to detest ignore, despite signs of technical improvement.
I’ve talked about this in the office, and with some of our clients who either own specific Japanese names — or live there. The thought process is Japan is a potential surprise in 2011.
I first spotted this on FusionIQ; The reason was due to it flipping back and forth between a Neutral and a Buy in October. EWJ is a VERY interesting chart — much more so than the Nikkei Dow; EWJ is in a nice uptrend that slipped over its the December 2009 highs earlier this month; It just got over its April 10 highs this week.
Here are 10 Reasons I want to own some Japan for 2011:
10 Reasons to Think About Japan
1. Everyone seems to hates — or just ignore — Japan as an investment; its widely disliked for its bad demographics, aging population, ongoing MULTI-DECADE recession.
2. The chart! Nice uptrend, new highs.
3. Institutionally and on Main Street, Japan is VERY under-owned.
4. The island nation is still the 2nd biggest economy in the world in real (not nominal GDP) dollars; they are a huge exporter, and an industrial powerhouse.
5. Proximity to China: As it grows, Japan has easy access to even cheaper low end manufacturing. The high value engineering and design work stays in Japan, but the toxic smokestack industry moves to the mainland.
6. Improving global economy could help Japan’s export business.
7. If China rescues Europe, Japan benefits.
8. The country has shown long term resilience to misfortune — the only nation to be nuked (2X!)
9. Modern infrastructure, highly educated, excellent work force; forward thinking gadget-head consumers.
10. Consumer prices are anticipated being flat next year — the 1st time after 3 years deflation.
And did I mention I like the chart ? Note how many times EWJ got turned back at $11. What would get me really excited was a high volume breakout over $10.90-11.
EWJ iShares Japan (10 Year Weekly)
EWJ iShares Japan (12 Month (Daily)
All charts courtesy of FusionIQ