Japanese investors wake up to dividends
By
Markets Editor
Andrew Van Sickle May 26, 2006
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Good news for Japan bulls, says Christopher Wood on Breakingviews.com: local investors are discovering dividends. For instance, Nomura’s Japan High Yield Equity Fund, was launched in mid-April with assets of Y49bn; this figure has since risen to Y119bn. Net assets of investment trusts specialising in dividend plays have jumped by 190% to Y410bn since the start of the year. It’s a sign of “thawing risk aversion” that the Japanese are willing to buy dividend plays at all; the hottest selling local product has hitherto been global bond funds. And the rising demand should put pressure on Japanese companies to increase dividends and thus bolster the appeal of the market. There’s plenty of scope for dividend hikes to help boost yields beyond the current lowly average of around 1.2%, says Miki Tanikawa in the International Herald Tribune. Japan Inc, having restructured and paid down debt accumulated during the bubble years, has an estimated Y82 trillion (£412bn) in surplus cash.
Meanwhile, not only has there been real progress on the structural reform front, but recent forward looking indicators point to a gradually improving economy, says Hilary Cook of Barclays Stockbrokers in The Daily Telegraph. Throw in a market valuation at a near 25-year low, and Japan is well worth a look.
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