Announcing a New US Trade Deal With…! 📝

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Announcing a New US Trade Deal With… 

… Japan. Sorry to get your hopes up. The US and China remain divided economically, but not all of Asia is a closed door. Investors are often curious about Japanese stocks, so here’s what this new trade pact really adds up to.

Japanese Prime Minister Shinzo Abe is on a trade dealing world tour. First, it was Japanese electronics in exchange for Australian cheese in 2014, before a bilateral agreement with Europe tore down tariffs to investors’ delight. Yesterday, Abenomics continued with a brand new American deal at the United Nations. He’s showing President Xi of China how it’s done. Japan will warmly embrace American agricultural products so that customs duties can be lowered and 40-billion-dollars of digital trade can get underway.

However, no matter how far goods travel, there are certain things investors will only find in Japan. For almost thirty years, the country’s main stock exchanges were stale. Even today, scores of Japanese companies remain dirt cheap. This is partly due to a lack of innovation and shareholder activism, but also due to some very weird requirements for stocks to list on the ‘first section’ of the Tokyo exchange. The efforts of many companies to comply with those requirements have led to even weirder investment strategies.

To meet a minimum shareholder quota, a third of all companies shower investors with gifts, literal gifts. Alongside your dividend, enjoy some Cup Noodles, Disney tickets for two, or a fine dining experience. It’s a one-of-a-kind idea and it certainly divides opinion. Many buy stocks right before their ex-rights date to these gifts, so a shrewd trading opportunity could be to get in just before. In any case, this is out-the-box investing, and maybe Abe’s new trade deals can bring the country’s investing antics back down to Earth. Probably not!

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