Kathy Said that Gain 20% Topix index is the only strategist to predict the decline in Japanese stocks

The only strategist to predict the decline and recovery in Japanese stocks this year, now says the Topix index gained 20 percent in six months.

Kathy Matsui, chief equity strategist for Japan at Goldman Sachs Group Inc. in Tokyo, is telling clients to buy cars and technology producers because the benefits will increase as withdrawing yen against the dollar after hitting a 15-year high in October. She has history on his side. Two months after the yen peaked in April 1995, the Topix began a rally 44 percent over 12 months.

"Many investors make the mistake of being too emotional hung on the structural problems in Japan, and therefore cyclical opportunities are lost," said Matsui, 45, who has covered Japanese equities for 20 years. "If you have the stars aligned to a better U.S. economy, weak yen, the profits going back to 2007, peaks and very low birth weight foreign investors, which could easily deliver 15 to 20 percent .

Matsui, a graduate of Harvard University, who first visited Japan on a scholarship to the University of Kobe in 1986, is up, even after the trust among the largest manufacturers in the nation fell for the first time since March 2009, unemployment rose and the reluctance of executives to invest pushed cash reserves to a record high. The Topix briefly erased their losses in the year to date last week, gaining 1.7 percent to 903.14. The indicator rose 0.1 percent today.

American Sales

The rate of 1664 Japanese companies will rise 20 percent to 1,080 in the next six months before collapsing to 1,000 in late 2011, he said. Matsui, a California native who became a partner of Goldman Sachs in 2000, favors companies with a higher proportion of U.S. sales. Nikon Corp. and Bridgestone Corp. are among the 31 actions recommended as eligible for U.S. buyers to buy more cars, computers and smartphones.

The influence of the yen in Japanese equities has never been greater. The correlation coefficient called 120 days Nikkei 225 Stock Index came within 0.34 November 25, the strongest inverse relationship since at least 1991. The indicator measures the extent to which the index moves in the opposite direction of the currency. The Nikkei fell 0.1 percent today.

In a year when the median forecast in Japan was wrong by 20 percentage points, the projection of Matsui in December that the Topix will rise to 1,050 and then fall to 800 is highlighted. The index advanced 10 percent to 998.90 on April 15 and then retreated 20 percent to 803.12 on 2 November.

2010 Slump

The strategists at Morgan Stanley bank Credit Suisse Group AG provides a 20 percent rally in Japanese stocks, the biggest annual gain since 2005. The exchange rate fell by 0.5 percent this year, the yen gained 11 percent against the dollar, reducing the value of the benefits for exporters from Japan.

Goldman Sachs has been good enough for Japan's actions, "said Pearlyn Wong, an investment analyst based in Singapore at Bank Julius Baer, which manages about $ 275 million. "I see your research with fairly regularly."

Matsui, who earned his master's degree at Johns Hopkins University in 1990 and worked at the Export-Import Bank of Japan to the Washington office and Barclays De Zoete Wedd before joining Goldman in 1994, raised his recommendation on the populations of Japan "neutral" from "underweight" on 12 November at the fastest growing speculation the U.S. may cause the yen to depreciate against the dollar. The Topix has advanced 6.6 percent since then.

The U.S. growth forecasts the next year have risen 2.6 percent, from 2.4 percent in October. Goldman Sachs is more optimistic, forecasting GDP will increase 2.7 percent in 2011, after the Federal Reserve said on 3 November that it plans to buy up to $ 600 billion in treasury bonds to stimulate inflation.

Unanimous Bulls

Now Matsui, who takes classes in Japanese cooking in his spare time, has plenty of company. Strategists planned advance rates in the country by 16 percent in 2011. They are expecting valuations closer to the record of lifting its shares.

That was not enough to spur action in the second largest economy in the world in 2010. Companies in the Topix began trading year average book value of 1.1 times, almost half the valuation of the 500 Standard & Poor's. The many Japanese fell to 0.96 in November, the lowest level since at least 1993, before rising to 1.08 last week.

"I just grew '

Byron Wien, the Blackstone Advisory Services vice president called for the people of Japan, one of the best bets for 2010 in January, says it is "neutral" after the Bank of Japan policy to stimulate economic growth does not 20 months managed to reverse deflation. One indicator of Japan's consumer prices, excluding fresh food fell 0.6 percent from a year earlier, the statistics office said on Nov. 26 in Tokyo.

"I was disappointed by Japan," said in Vienna a reply to questions sent. "The economy barely grew and continued deflation. I'm not thinking a lot about Japan these days."

Japan's economy may contract by 0.5 percent in the three months ending in December. The forecasts also show that GDP would increase by 1.4 percent next year, the slowest growth since 2002.

The weakening economy and Japan 10500000 billion dollars of debt, most of the world, the Topix has the worst performance among the 30 major market indices and global stock funds last year. The benchmark index gained 27 percent since March 9, 2009, compared with 84 percent for the S & P 500 and 75 percent for the Stoxx Europe 600 index.

The loss of confidence

Japanese executives do not share Matsui's bullish outlook. The quarterly Tankan index of sentiment at large manufacturers fell to 5 December from 8 September, the Bank of Japan said in Tokyo on 15 December. The measure is expected to fall at least 02 March, and the companies submitted the stronger outlook for the yen since the data began in 1996. A positive number means pessimists outnumber optimists.

Concern that the economy is contracting executives can keep spending. non-financial companies in Japan have increased holdings of cash for eight consecutive quarters and held 206000000000000 yen (2.5 billion dollars) in cash and deposits at September 30, the Bank of Japan said on 17 December. That's the largest amount since comparable data began in 1979.

"The longer term outlook is still very difficult," said Shane Oliver, who oversees about $ 85 billion as chief investment strategist at Sydney-based AMP Capital Investors Ltd. "The growth potential of the Japanese economy is Japan seems so poor and just have this chronic inability to do anything about deflation. "

Oliver said it reduced its allocation to Japan's actions to "moderately overweight" from "overweight" for three months.

35 trillion yen

The Bank of Japan is trying to stimulate growth of ¥ 35,000,000,000,000 asset purchases and reduce its target interest rate to as low as zero in October. The central bank has created a fund of 5 trillion yen to buy bonds and equities, and said on December 14 will begin the acquisition of real estate trusts investment and exchange-traded funds.

Yields on Euroyen futures signal the Bank of Japan will not raise interest rates until at least June 2012. Gov. Masaaki Shirakawa, will the rate of overnight loans in the range between zero and 0.1 percent at a political rally which ends tomorrow.

Kunihiko Sugi, who oversees about $ 7 billion as chief investment officer at Invesco Asset Management (Japan) Ltd., said that Japanese shares may exceed the weakening of U.S. economic growth improvement. Analyst estimates for companies in the Nikkei show annual profits could reach 788.93 yen per share for 2012, the highest level since 2007 peak of 852.08 yen.

Foreign investors

Foreign investors own less than the actions of the country compared with the MSCI EAFE Index of 968 companies in developed markets, "said Matsui. International capital funds have been allocated 15.2 percent of assets to shares in Japan, compared with an approximate weight of 20 percent as the shares of Europe, Asia and Israel, according to data compiled by Goldman Sachs.

"Next year, with a strong U.S. economy, we believe that focus will begin to return to Japanese stocks," Sugi said in an interview from Tokyo. "The export Japanese stocks should rise with ease."

The yen has weakened 5 percent to their lowest in nearly three months of 84.51 per dollar from 01 November, when it reached 80.22, the highest since April 1995.

Nikon, Bridgestone

Nikon, which derives more than 30 percent of its revenue from North America increased 7.8 percent to 1,640 yen from 1 November when the yen began to depreciate. The shares advanced, even after the Tokyo-based manufacturer of cameras and lenses cut its annual profit forecast on Nov. 4.

Bridgestone, the largest tire manufacturer in the world, has gained 13 percent to 1.607 yen from 01 November, comparing the fall of the year to date to 1.2 percent. The Tokyo-based company that has 43 percent of its revenue from North and South America increased last year amid record rubber prices, which reached as high as 400.9 yen per kg in the Commodity Exchange Tokyo on 17 December.

For each decrease of one yen against the dollar, the companies of Nomura's 400 stock index gains 0.5 percent of its recurring profit, according to Takashi Ito, a strategist at Tokyo-based firm. He said profits to manufacturers and software developers benefit the most, rising 2.5 percent and 2.3 percent, respectively, for each decrease of one yen. producers of raw materials and real estate developers are less affected by currency depreciation.

"Japan has a way to have these little splashes of superior performance," said Matsui. "If you do not catch the wave quickly, you can lose."

Strategists Year Forecasts for Japan's actions in 2011

* Strategist signature T Topix% Nikkei exchange Masatoshi Kikuchi Bank of America Barclays 6.8% 11,000 12,000 16% Fumiyuki Takahashi Citigroup Suisse Fujita Tsutomu 1000 11% Credit Shun Maruyama 1200 33% of the Deutsche Bank 1000 the Naoki Kamiyama 11% of Goldman Sachs, Kathy Matsui 1000 11% of Morgan Stanley Alexander Kinmont 1100 Nomura Seiichiro Iwasawa 22% 1100 22% of UBS Shoji Hirakawa 12 000 16%