Investors are counting on domestic demand-driven economic recovery — for good reason.
Inventory and capital spending cycles have changed for the better. Years of restructuring efforts are brightening economic and corporate earnings prospects. Japan is about to introduce unprecedentedly bold social reform by utilizing information and communications technology under medium- and long-term state policies to promote structural reforms toward the 21st century.
More than 100 trillion yen in postal savings will reach maturity in the next two years and, given the extremely low interest rates on deposits, a big chunk of the money could flow into the equity market.
There seems a good chance the Nikkei average will soon test the postbubble high of 22,666 hit on June 26, 1996.
Although information-processing stocks are going through price corrections in reaction to an unfavorable supply-demand balance, investors should continue focusing attention on them. In particular, semiconductor issues are recommended because the devices are important for information and communications technology. Besides, chip makers have clear profit structures.
Investors should also pay attention to makers of semiconductor production equipment and companies benefiting from corporate capital spending.