Why there are signs of life for Japan

ON JAPAN

At the turn of the year, the investor's gaze turns to the crystal ball to divine the prospects for the new year.

Fund managers do much the same but generally conclude their asset class must be the one to own for the year ahead. Thus, with all things considered and not wishing to fly in the face of tradition, surely 2012 will be the year for Japanese equities. In 2011, the Japanese market fell back to post-Lehman lows and is now lower than 2003 when the market was in the throes of a banking crisis. That said, Japan was neither the best nor worst performer in 2011 – worse than the US, but better than the eurozone and the BRICs. The market now trades below its book value and profits are forecast to...