After weeks of speculation, the Japanese have finally stepped in to stem the historic rise of the Yen. Over the past week, the Yen hit a record ¥75.50 to the US Dollar. After the intervention, the Yen weakened to ¥79.50 per US Dollar (more Yen per Dollar equals a weaker Yen).
And it’s great news for Japanese exporters…
For most of the year, the Yen’s been strengthening. In fact, it reached the highest exchange rate since World War II. In the process, Japan’s strong currency is taking its toll on business.
You see, Japanese products become more expensive as the Yen strengthens. In the process, it makes Japanese exports such as autos and electronics less competitive overseas.
Even worse, a strong Yen reduces profits earned outside Japan.
That’s one of the biggest problems for companies like Sony, who does over 70% of its business in foreign countries. Sony is expected to post another quarterly loss when it reports results this week. They’re pointing to a strong yen and a struggling TV business as the culprits.
Other companies are also feeling the impact…
Nissan Motor Co.’s CEO, Carlos Ghosn, recently warned that Japanese auto makers may be forced into a “major strategic rethink if the yen stays near its recent record levels.”
As you can imagine, the recent Yen intervention is warmly welcomed by Japanese businesses.
And the Japanese finance minister, Jun Azumi, advised the coordinated selling of Yen may continue. In a statement released at the time of the intervention, Mr. Azumi made it perfectly clear, “Japan will continue to intervene until satisfied.”
In the wake of the ongoing intervention, now may be the perfect time to get into stocks that can profit from a weaker Yen.
It’s pretty clear a weaker Yen can only help Japanese companies’ sales increase. And their suppliers will see bigger revenue gains as well.
You’re going to want to buy companies now that can profit from the sales surge in the next few months.
Here’s where I’d start looking…
Focus on the suppliers of the big boys… major Japanese corporations. Companies like Cannon (CAJ), Honda (HMC), Hitachi (HIT), Panasonic (PC), Sony (SNE), and Toyota (TM), make for a great starting point to your research. As the Yen weakens, these companies will no doubt profit!
You’ll certainly find an endless list of component makers, electronics, and specialty suppliers out there for you to scoop up. With a little detective work, you’re certain to find penny stocks poised to profit from the weaker Yen…
Until next time,