Dear Risanto Lase,

My name is Anis (انيس ابزويط) and I work for Marketiva Corporation

(http://www.marketiva.com/). Marketiva is an over-the-counter market maker where people
can start trading with as little as $1 and learn how to successfully participate in
various financial markets around the world.
Major shifts have taken place around the world over the last three decades, especially
in the field of finance. Worldwide investing offers both businesses and investors a
unique opportunity to earn high returns on their investments. The outstanding
macroeconomic achievements of economic giants such as Brazil, China, India, and Japan
are well celebrated accomplishments both in print and broadcast media. The unfolding
trends in global economics forebode promising prospects and encourage investors to stay
upbeat for years to come. Real-time communication means and the ability to trade
global markets 24 hours a day are taking investors beyond the confines of their home
capital markets in search for better returns on their investments. We will discuss here
the topic of international investing and the promises and risks associated with it,
with emphasis on the Japanese stock market.

Post World War II era marks a touchstone in the race for economic development. The
United States Government led-initiatives and the Federal Reserve System decisions were
major catalysts behind the growth in leaps and bounds of economies such as those
witnessed in Japan and West Germany. The implementation of the Marshall Plan
facilitated the rapid economic recovery of West Germany. The fast recovery from the
ruins of World War II in Japan despite the burden of a massive military buildup and the
Cold War competition was hastened by U.S initiatives. In only a few decades, Japan
became the second largest economy in the world. U.S. financial institutions and
businesses invested enormous funds in the economic development of these countries and
others and more often than not reaped exceedingly high returns on their investments.
The educational efforts undertaken by the Japanese, their ambitious investment plans,
and their competitive products produced significant results. These high-powered
economies did flourish with modest inflation and they did ultimately create attractive
environments for their businesses and investors. Despite the steep decline in the
Japanese stock market and real estate values during the past decade, several
macroeconomic barometers suggest that a business cycle expansion is already under way
in Japan. Japan's GNP continued to grow in the 1990s and reached a peak performance in
1995 of 5.3 trillion dollars.

Nippon investment fund invests in stocks of Japanese companies. Basically, when an

investor is owner of a share of Nippon fund, the value of the fund fluctuates in two
ways. First, the price of a share of Nippon will rise or fall in accord with the supply
and demand for the Japanese companies the fund invests in. Second, the value of this
fund moves up or down depending upon the foreign exchange rate of the U.S. dollar
versus the Japanese yen. Thus, an investor holding Nippon shares would watch the yen-
to-dollar relationship. The fund management team calculates the fund's value everyday
in terms of U.S. dollars so the Nippon Fund share price is denominated in USD dollars.
A decline of the U.S dollar versus the yen will increase the value of Nippon's
investment holdings since more dollars will be demanded in exchange when the portfolio
is later converted back into dollars. Conversely, if the dollar rises in relation to
the Japanese yen, the dollar denominated value of the investment portfolio would
decline. However, most Japanese companies are export driven and will benefit because a
significant size of their product lines are exported to the U.S. markets. There are
several other factories to be taken into account when investing worldwide. Global
politics, economic trends, unpredictable taxes, and the likelihood of expropriation, to
cite only a few. In addition, accounting, auditing, and reporting standards are less
stringent than they are in the U.S. markets, adding further to the risks of foreign
investing.

THE JAPANESE STOCK MARKET

The Tokyo Stock exchange (TSE) was inaugurated in 1878, primarily for trading
government bonds, gold and silver currencies. Stocks acquired widespread popularity
during the 1920s and 1930s. Today, stocks represent more than 90 percent of all TSE
financial transactions. TSE was reopened in May 1949 in Kabutocho financial district
and experienced since then substantial growth. In 1989, and before the steep decline in
Japanese stock prices, the total value of the Japanese stock market exceeded 4 trillion
dollars. The Nikkei Stock Average, an average which consists of 225 of almost 2200 TSE-
listed stocks, registered a six-fold advance in 1980s alone. The Nikkei average rose
from 6,536 in 1980 to its peak performance of 38,916 in December 1989. During the early
1990s, the Japanese stock market declined significantly. The Nikkei fell to less than
10,000. The Tokyo Stock Price Index, called the TOPIX, dropped dramatically. The TOPIX
index measures the change in market price with the base year set to January 4, 1968.
The TOPIX is broken down to thirty-three sub-indices to enable investors to analyze the
market by industry groups. There are two different 2-hour trading sessions in TSE every
day from Monday to Friday. The morning session is called zemba and begins from 9 A.M.
to 11 A.M. The afternoon trading session, which is called goba, starts from 1 P.M. and
ends at 3 P.M. Most stocks listed on the TSE are traded electronically rather than
through specialists. In addition, a significant portion of all Japanese stock trading
is carried through a small group of brokerage firms and their affiliates, namely,
Nomura, Daiwa, and Nikko Securities. U.S. and other oversee brokerage firms were
allowed to participate in the Japanese financial markets only in 1985. A small group of
insurance companies and banks account for a significant size of the daily volume on the
TSE. Companies listed on TSE must meet certain size, profitability, and shareholder
requirements to be listed. The companies listed on TSE can be classified into several
business segments-fishing, mining, paper, chemicals, rubber, textiles etc. There are
four other stock exchanges in Japan, namely, the Osaka securities Exchange where more
than 1,000 companies are listed. The Japanese over-the-counter market is small with 200
stock issues only. There are other small exchanges.

During the whole period of the 1980s, the Japanese speculated significantly in the real
estate business. Land is not quoted by the acre, but rather by the square foot. Japan's
surface covers 146,000 square miles. Real estate in Tokyo was being quoted at an
average of 6,000 dollars per square foot and there were several reports of much higher
real estate prices across Tokyo. Japan's real estate reached astronomical values and
threatened the Japanese banking industry and stock market. Many analysts in the west
pointed out to the bubble in the Japanese real estate and were not surprised when the
sharp decline in real estate values and stock market prices set in. In fact, Japanese
banks were very active in aggressive lending with land values placed as collateral. A
large portion of Japanese banks holdings consisted of stock market values. Loans by
Japanese banks were used to finance real estate purchases. Even today, Japanese banks
assets still consist of substantial stock holdings. The value of real estate holdings
of a TSE listed company were used to justify the price of its shares on the stock
market. Despite these dramatic declines in real estate values and stock prices, Japan's
economic fundamentals suggest that a recovery has already began.

Again, we suggest you to trade with virtual money for as long as possible, before
trading your own funds. We will continue this practice of sending educational e-mails
in order to help you obtain further knowledge about various financial markets. If you
need more information, please reply to this e-mail and we will provide you directions
on where to get more education material.
Best Regards,

Anis (انيس ابزويط)

Analytics / Consultant
Marketiva Corporation
anis.bziouit@marketiva.com
http://www.marketiva.com/
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