The sharp sell-off in the Tokyo stock market after the Kobe earthquake was enough to ruin Nick Leeson's arbitrage and options trading strategy in Singapore and bring down Barings. Hundreds of other investors have had their fingers burnt by buying in too early to the Japanese market, hoping for the prolonged recovery that many expect but nobody has yet seen. The Nikkei is down by more than 20 per cent this year.
It is in just such circumstances that smart investors expect to make money. The argument on fundamentals still looks ropey. Everyone is worried about the banks. But this is one of those occasions when technical analysis can provide a useful contra-indicator. The charts that Robin Griffiths uses at James Capel tell him that the turn in the Tokyo market is imminent. Both the banks and the utilities look good value, and the best way to gain a geared exposure to the market's rise, he says, is to buy warrants in Nomura. At the bottom of markets, says Mr Griffiths, there is nobody more bearish than stockbrokers. A good time to buy is when the brokers think their jobs are on the line. That time is now.Reuse content