By James Saft
(Reuters) – After 23 years of being the smelly wet dog of global markets Japan may be at a turning point.
With many massively, and understandably, short on Japan, the possibility that new policies actually work, or fail memorably, means investors are carrying considerable, and growing, risk. Now might be a prudent time to move closer to a benchmark allocation, which for most of us means putting money back in Japan.
A set of radical new fiscal and monetary policies being pushed by newly-minted Prime Minister Shinzo Abe might finally succeed in bringing inflation and growth back to Japan, but also could easily end in a financing or banking crisis.
Abe has advocated “unlimited” easing by the Bank of Japan, while at the same time going so far as to lay plans for the government to buy and lease back plants to troubled firms as a means of support and to spur capital investment.
Abe also advocates a weaker yen to make Japanese exporters more competitive. Global markets think he means business, driving down the yen’s value against the dollar by more than ten percent since mid-November, when his victory in elections first seemed secure.