Chorus Gets Louder in Favour of Japan

by Stephen Northfield

 

Money & Markets, Report on Business, The Globe and Mail, March 26, 1999

 

“Yesterday’s contrarian position – that Japan is finally on the mend – has become today’s middle-of-the-road consensus.”

 

“And while international money managers sow madly to build up their woefully underweight positions in Tokyo, Sid Klein has been quietly reaping.”

 

Mr. Klein, a Montreal-based financial adviser, has been a Japan watcher…for years.  After calling the turn ahead of the crash of 1990, Mr. Klein has patiently sat on the sidelines ever since, dismissing the Nikkei’s false starts.  His consistently bearish views have been duly noted in Barron’s, as well as in his daily fax bulletins to clients.

Last October, after seeing what he deemed to be a ‘1932-like low’ in the Japanese market, he came in off the bench”

 

“Since then, the Nikkei 225, the most watched benchmark of the Japanese market, has risen a little more than 20 per cent.”

 

“More importantly, Japan’s over-the-counter market, a much better barometer for the domestic-oriented stocks that Mr. Klein is focused on, is up more than 50 per cent since the October lows.

Mr. Klein’s advice has been to forget the blue-chip, export-driven outfits like Sony Corp. that carry big weight in the much-watched Nikkei 225 index.  Mr. Klein’s thesis is that the gems can be found among the charred ruins of stocks tied to the moribund Japanese economy, shares that have been crushed since the asset bubble burst in the early 1990s.”

 

“The stocks of many of these companies – like Japan Airport and Cleanup Corp. – have surged since Mr. Klein made his call…”

 

“Repatriation of Japanese investors’ vast overseas holdings has already begun, lifting the yen along for the ride, forces that should help pull the market yet higher still.

Mr. Klein was once a lonely voice in the wilderness, but these days, it seems, there’s a lot of other folks singing from his song sheet”