Letters of the Week

Investing in Japanese equities, renting high-end property, and clarifying dividends.

Investing in Japanese equities

I found Shane Oliver’s prediction quoted below about the Japanese equity market interesting:

“Our assessment is that it (the exchange Rate) will fall (from ¥95) to around ¥105 by year end, with the boost to exporters and the Japanese economy generally likely to push the Japanese share market up 30% or so this year.” (See Weekend Briefing, January 26).

If we assume that it could occur (as has happened in the US with quantitative easing) my interest is is – how do I (an Australian SMSF investor) get access to the Japanese market? I realise that if the exchange rate changes, as predicted, it will erode around 10% of any gain but it may still be worth considering.

Perhaps this is something for all Eureka Report subscribers to digest.

W Hodge

Editor’s response: Eureka Report published the article Japan back on the radar screen earlier this month. Also, as covered in the 2011 Eureka Report article Japan’s big chance, there are several ways for retail investors to get exposure to the Japanese market, including managed funds, some listed companies, and especially ETFs – such as the iShares MSCI Japan ETF (IJP).

Renting high-end property

I see very little analysis of residential property valued over $1.5m in Eureka Report. I find this a bit odd, considering I assume the majority of readers would own a property in this category. You’re missing out on some fascinating stories. I am currently renting a property in Bondi that was valued at $7.5 million just 12 months ago. There was an offer of $8 million that the landlord previously rejected. Today this property is worth less than $4 million. The area is overrun with properties owned by the banks, who would rather rent them out than put them back on the market. I personally know two people who are considering renting properties valued at $8 million to $12 million for $4,000 a week.

This market looks like it will take years to recover.

S Meadmore

Clarifying dividends

Are you able to clarify whether the dividend figures quoted in Scott Francis' article (A Steady Dividend Flow, January 21) include the dividend component of structured buybacks such as that carried out by BHP approximately 18 months ago? If yes, perhaps the figures should only include interim and final dividends?

KP

Scott Francis’ response: Thanks for the question. The dividends used in calculating the dividend return only include the final and interim dividends in each year, as you suggest. The use of special dividends and large dividends that are often paid in off market buy-backs would distort these calculations.

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