Playing the Nikkei Market

Consumer Cyclical | Financial Stocks | Contrarian Investing

A number of Japanese companies are reasonably priced and accessible to foreign investors.

Lloyd Barclay, March 2005

www.lloydbarclay.com

There's bad news and good news about investing in Japanese companies and the Tokyo Stock Exchange. The bad news is that, if your account is outside Japan, trading Japanese stocks is likely to be difficult or impossible. The good news is that Japan is well represented on the New York Stock Exchange by 19 companies that have issued American Depository Receipts. American Depository Receipts (ADR) are essentially shares of foreign companies that trade on the NYSE.

There's more good news. Contrary to popular belief, not all Japanese stocks are over-priced. The ADRs of Sony, Matsushita and Pioneer all trade at reasonable valuations compared to their competitors in other countries.

Business (for the purpose of investment) is first classified into broad divisions called sectors. Each sector is then divided into smaller divisions called industries. Sectors represented include Consumer Cyclical, Technology, Financial Services, Capital Goods and Basic Materials.

The following is a list of Japanese companies that trade on the NYSE, classified first by sector and then by industry. After each company name is the stock symbol which is used to place buy and sell orders. Example: If you want to buy Sony, you need to use the symbol "SNE" when you place the order either by phone or on-line.

Consumer Cyclical

Sony (SNE), Matsushita (MC) and Pioneer (PIO) are in the Audio and Video Equipment Industry.
Toyota Motors (TM) and Honda (HMC) are in Auto and Truck Manufacturing.

Technology

Canon (CAJ) is in Computer Peripherals.
Kyocera (KYO) and Advantest (ATE) are in Semiconductors.
TDK (TDK) and Nidec (NJ) are in Electronic Instruments & Controls.
Konami: KNM are in Software & Programming.

Financial

Mitsubishi Tokyo Financial Group (MTF) is a Regional Bank.
Nomura (NMR) is Investment Services.
Nissin (NIS) is in Consumer Financial Services.
Orix (IX) is in Insurance.

Services

Nippon Telegraph & Telephone (NTT) and NTT Docomo (DCM) are in Communication Services.

Capital Goods

Hitachi (HIT) produces Miscellaneous Capital Goods.

Basic Materials

Kubota (KUB) is in the Iron & Steel Industry.

The Value of Contrarian Investing

My investing style is contrarian and value. Every stock I buy has to be trading at good valuations and at a significant discount to its all-time high. As previously mentioned, Sony (SNE), Matsushita (MC) and Pioneer (PIO) are the only companies that fit my requirements. However, in the next few years, new buying opportunities may arise as other companies fall out of favor.

To view my portfolio of value-contrarian stocks, please visit my investment web-site at:
www.lloydbarclay.com

Lloyd Barclay