Japan's Economy: A Bullish Outlook for 2007

Japan's economy has been expanding since 2002, but recent data suggests this growth may be slowing. Our guest, Guy van der Walt, director at Helvetia Wealth, believes there is still value in Japanese equities, particularly in small caps. Van der Walt expects the economy to continue growing through 2007, albeit at a slower pace than in previous years. He highlights several companies, including Aplix and Yahoo Japan, as attractive investment opportunities.

Key Takeaways:

• Japan's economy has been expanding since 2002, with a potential for continued growth through 2007.
• The pace of growth is expected to slow down to a somewhat slower level than in the past two years.
• Small caps in Japan are a promising area for investment, with companies like Aplix and Yahoo Japan performing well in a buoyant market.
• Aplix is a small cap technology company with a buy recommendation from UBS and Merrill Lynch.
• Yahoo Japan, a leading internet company in Japan, is expected to benefit from a buoyant domestic market.
• Venture capital company JAFCO is attractive due to its focus on small cap companies in a growing economy.
• Companies in Japan are focused on repaying debt, which has led to corporate earnings growth reaching new record highs in the last three consecutive years.

Statistics:

• Japan's economy has been growing since 2002.
• The potential value in Japanese equities is huge, according to Guy van der Walt.
• Corporate earnings growth has reached new record highs in the last three consecutive years.
• Aplix is trading at 45,900 yen, with a price target of 60,000 yen from UBS.
• Yahoo Japan is trading at 45,900, with a price target of 60,000 yen from UBS.

Sources:

• CNBC/Dowel Jones Business Video, interview with Bertha Coombs and Guy van der Walt, director at Helvetia Wealth, 2006.
• Maura Fogarty, CNBC Anchor, Asia.
• Ross Westgate, CNBC Anchor.
• UBS and Merrill Lynch investment reports on Aplix and Yahoo Japan.