Friday, April 4, 2014

Inflation Is Back in Japan

Japanese companies said in a recent survey that they expect inflation to be 1.5% in the coming year. If true that would be an end to 15 years of deflation that has dragged down the Japanese economy. Though this is lower than the BOJ's stated target of 2%, I think the BOJ target was really using the target as a device to increase people's inflation expectations. I doubt that the BOJ really thought the 2% target was achievable.

The Yen is now at 103.8 to the dollar, which is around a high for the last five years. With this depreciation, may companies will now be able to turn a profit after years of losses, and hence pay taxes. Short term, I think this is great news. My Japanese holdings which I first began to buy 13 months ago are up about 20% in USD, including dividends. It is a decent result but not spectacular considering the current raging US market. It looks like I need to think more long term. I confess I was hoping for a relatively quick profit. I feel my Japanese netnet investments deserve to gain 50%, at least, so I'll keep waiting.

To read about my three Japanese investments, look for them under labels, on the right.

No comments:

Post a Comment