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Monday, June 28, 2010

Japan Growing Again? Good News from Japan and Keeping a Global Perspective

We promise to share more on individual stocks in coming posts. But, on the heels of our How's the Economy Doing post last week, we wanted to briefly relay positive, relevant news from Japan.

The country reported May trade figures last week and a 6/24/10 Journal of Commerce article, "Japanese Exports Surge 32.1 Percent," succinctly summarized salient points. We share bullets directly from the article to again illustrate that global commerce is alive and doing fairly well despite ongoing economic concerns - some emphasis added:
  • Japan posted a trade surplus with the rest of the world for the 14th consecutive month in May thanks to strong exports, especially to the other Asian economies, according to preliminary figures released by the Finance Ministry on Thursday.
  • In May, Japan's overall exports rose for the sixth straight month on a year-on-year basis, surging 32.1 percent to $59.01 billion, while its overall imports increased for the fifth successive month on a year-on-year basis, growing 33.4 percent to $55.41 billion. As a result, Japan posted a trade surplus of $3.6 billion in May.
  • The year-on-year rise in Japan's overall exports in May was led by automobiles, steel and electronic parts, including semiconductors. The year-on-year rise in Japan's overall imports in May was fueled by crude oil, liquefied natural gas (LNG) and nonferrous metals.
  • After falling for 28 months, Japan's exports to the United States rose for the fifth consecutive month in May on a year-on-year basis, growing 17.7 percent to $8.42 billion. After falling for 15 months, Japan's imports from the U.S. also increased for the fifth straight month in May on a year-on-year basis, growing 23.5 percent to $5.76 billion.
  • Japan's trade surplus with the U.S. widened for the fifth successive month in May on a year-on-year basis, expanding 6.9 percent from the same month of last year to $2.66 billion. The year-on-year rise in Japan's U.S.-bound exports in May was driven by automobiles, auto parts and steel. The year-on-year rise in Japan's imports from the U.S. in May was buoyed by aircraft, electronic parts, including semiconductors, and organic chemicals.
  • Japan's exports to its biggest trading partner China rose for seven months in a row in May on a year-on-year basis, surging 25.3 percent to $11.34 billion, while its imports from China rose for four months in succession in the month on a year-on-year basis, jumping 32.2 percent to $12 billion. Japan posted a trade deficit of $647.78 million with China in May. It was the second consecutive monthly trade deficit.
So, even with the second highest debt-to-GDP ratio in the world (please see our prior post here), Japan's economy appears to be moving in the right direction, with a trade surplus to boot. On a related note, last week, Japan also raised its FY 2010 GDP growth forecast to 2.6% from 1.4% - from an AP article
  • Japan's economy will grow at a faster pace in fiscal 2010 than projected at the end of December, the government said Tuesday, predicting real gross domestic product will expand 2.6 percent instead of 1.4 percent. 
  • If the latest projection holds true, it would mark the first economic expansion in three years, with the growth rate topping 2 percent for the first time since fiscal 2006, when the economy grew 2.3 percent.
  • The government said the economic recovery is expected to pick up pace as growth in demand will likely help to boost corporate earnings and improve employment and income conditions, resulting in a positive growth cycle.
To put all of this in perspective, Japan is the fourth largest economy in the world -- from the CIA World Factbook:

There are a number of ways to participate in global growth trends, including ownership stakes in multinational U.S.-based companies as well as investments in foreign companies. One way we expect to benefit from the recovery in global trade is through our ownership positions in container shipping companies Seaspan (SSW) and Global Ship Lease (GSL).

Happy investing,

Jeffrey Walkenhorst

Disclosure: long SSW, GSL.

© 2010 Jeffrey Walkenhorst
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