Harry Houdini-san

Are Japanese markets totally irrational? If foreign investors look past their own assumptions of Anglo-Saxon capitalism, they can profit.

An article I wrote in the October issue of FinanceAsia, The JGB Conundrum, dealt with how foreign bond fund managers have taken a bath because they wrongly assumed Japans markets operate on an Anglo-Saxon model of supply and demand. In fact Japanese bureaucrats are adept at twisting the arms of domestic insurance companies, trust banks and other institutions into buying government bonds to lap up the governments oversupply. This out-of-control supply problem is tilting global bond indices out of whack and creating big problems for overseas investors.

The article prompted some comments by a Westerner with extensive experience working for Japanese companies in Southeast Asia. In a series of emails...

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