Automobile exports have been slowing down. How Japanese exports to Asia perform over the next year will depend on their international competitiveness and global demand. The yen was 135 to the dollar a few weeks ago and has strengthened to 125-127 now. The exchange rate is a very important factor in corporate profits. When the yen strengthens from 135 to 127, it does impact on corporate profits but not substantially on balance sheets.
Fundamentals are very attractive.
We have been bullish about Japanese stocks for over a year now. Institutional investors focus not just on price-earning ratios but on book value and on cash flow. On those two measures, Japanese stocks are looking very attractive. Even the price-earnings ratio is attractive. We like cyclicals, raw materials, chemicals, petrochemicals, steel, pulp and paper as well as metals.