Out with the old and in with... the old.
The turnaround in the dollar-yen rate -- the greenback slid about 6% against the yen over the last five days -- has reinvigorated sectors that have largely been excluded from the benchmark
's 12% rally over the last month.
Already sectors that have been down-and-out throughout Japan's five-year downturn have gotten a quick boost. Not surprisingly, import-reliant companies got the biggest bang for the diminishing buck.
Here's a look at what's moving in the Japanese markets and why:
Japan's long-suffering retail sector -- it's been ground down as consumers pull their purse strings tighter in the face of a sluggish economy and higher taxes -- got a lift. Why? Because lots of goodies they sell are imported. Amit Khandwala, who manages the $13 million
Wright Equity Japan
, likes ubiquitous convenience store
, seen as one of the best managed companies in Japan.
With most internationally traded commodities denominated in dollars, it's easy to see why resource-poor Japanese utilities got a lift from the yen's new buoyancy. The surprise was the magnitude. The oil and gas index rose 5.8% Monday, fueled by expectations the yen price of oil would be cheaper. Fund managers like
Tokyo Electric Power
, the country's largest utility.
After leading the Nikkei rally over the past month, exporters were sold amid concern a stronger yen meant higher dollar prices and therefore weaker sales abroad. David Smith, who oversees the $7.1 million
Colonial Newport Japan
fund says selling exporters is a mistake. "A lot of these companies are immune," he says. "When was the last time you bought an American-made VCR?" He likes brand names like
, which are competitive at 90-95 yen to the dollar, a far cry from the current exchange rate of about 119 yen to the dollar.
Some things never change. And a stronger yen doesn't make Japan's debt-addled banks look anymore fetching, fund managers say. Wright Equity's Khndwala says be cautious when approaching anything in Japan's financial sector.