Japan: Still a Cesspool for Capital?

Japan has been known as country of fighters. They have emerged from ashes like phoenix after Second World War. That tiny country has become one of the biggest economies in the world. But after 1990 India and China has emerged rapidly. They started to challenge Japanese monopoly in Asian and worldwide markets. Last nail on the coffin was last recession in Japanese economy. Making money in Japanese stocks continues to be a battle. Since the benchmark Nikkei 225 peaked in 1990 at just below 39,000, the price chart showed multiple failures to halt the downside trend. Profit Confidential

The massive Tsunami created more troubles for already trembling Japanese economy. Not only Japan had lost valuable and trained human resources in thousands but also they had lost invaluable infrastructure and buildings. Massive radiation from damaged nuclear plants makes the scenario from bad to worst. My Market View Today

All these factors have affected the Japanese economy and its gross domestic product (GDP). In the fourth quarter of 2011, Japan’s GDP grew at a muted 0.6%, which is well below its historical average annual GDP growth rate of 2.15% from 1981 to 2011. Goldman Sachs estimates that Japan’s GDP will expand by 1.9% in 2012. The Organization for Economic Co-operation and Development pegs Japan’s GDP growth at 2.0% in 2012, but has it declining to 1.6% in 2013. http://www.profitconfidential.com

Emergence of China, India and Latin American countries is not helping poor case of Japan. These countries have emerged as better investment options for worldwide investors due to their vast trained human resources and evolving market.

It’s not coincidence that Japan’s decline and China’s rise had made their start simultaneously before three decades. Massively cheap labor force and created colossal manufacturing capacity for the world’s manufacturers looking for cheap labor and lower cost to produce goods are the secrets of Chinese rise in global market.

Just last year China surpassed Japan as world’s second biggest economy. In overall GDP too Japan is lagging behind China. Though Chinese economy is going through temporary bad patch and slow down still they are miles ahead than other G-7 nations. The great Chinese wall is here to stay. It won’t collapse so soon.

But you not ever write off Japanese phoenix. One of the most trusted names in world investment and whom people heard like prophet when it comes to investment Mr. Warren Buffet have some consoling and encouraging words for Japanese. He said that there is huge buying opportunity in weakening Japanese stocks. He is right on the bang as usual. Definatly there are buying opportunities in Japan. But the problem is there are better opportunities available in India and China.

But still anybody wants to investment in Japan then a careful proper planning is required. Several of the key Japanese banks, such as Mitsubishi UFJ Financial Group, Inc. (NYSE/MTU) and Sumitomo Mitsui Financial Group, Inc. (NYSE/SMFG), are interesting bank plays.

So if you want to come on conclusion here it is. Japan will remain among world’s best economies but they have to face stiff competition from other emerging world players like China and Japan.