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The Money Map Advantage
Monday, September 12, 2005
By Horacio Marquez
#9
** Koizumi’s Landslide Victory Paves the Way for Japan’s Stock Market Rally
Prime Minister Koizumi won the elections in historic fashion – his LDP party won 296 out of 480 seats, an astounding gain of 47. Combined with their New Komeito Party ally, the ruling coalition now controls more than two thirds of the lower house seats, which gives them a resounding mandate to proceed with the privatization of the Japanese postal service.
What makes this privatization extremely meaningful is that its postal service manages about one-quarter of the personal savings in Japan, deposited under savings accounts and life insurance policies. These enormous funds have traditionally been invested into public projects. Therefore, the privatization of this entity will bring a redeployment of those funds into the private economy, reinvigorating the country’s economy under the financial discipline of the market.
In addition, the landslide victory solidifies the possibility of extending Koizumi’s term beyond September. Finally, adding even more upside, Japan’s economy just posted a 0.8% GDP growth in the April-June quarter, vis-à-vis the 0.3% preliminary estimate released on August 12. This revision means that the annualized rate of growth was revised from 1.1% to 3.3%.
A good first step to capture this upside is to invest in Japan’s ETF (exchange traded fund), iShares Japan Index Fund (AMEX: EWJ)
**Action to Take***
Buy iShares Japan Index Fund (AMEX: EWJ) at market. And place a sell stop at $10 for protection. For the aggressive investors, I suggest that you buy EWJ with leverage, which is simpler than buying and tracking the slightly out-of-the-money October calls on the Nikkei 225 Futures that trade on the Chicago Mercantile Exchange.
Enjoy and profit,
Horacio Marquez
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com , or Mt. Vernon Publishing at 888.384.8339 or 410.230.1200.
Stock
Current Price
Comments
iShares Japan Fund (AMEX: EWJ)
New
Buy at market. Place a sell stop at $10.
Cerner Corp. (Nasdaq: CERN)
$84.32
Buy. Sell stop is $62.25.
Tenaris (NYSE: TS)
$117.81
Buy. Sell stop is $95.
MSCI Austria Fund (AMEX: EWO)
$27.36
Buy. Sell stop is $20.90.
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