Small caps loom large in Japan

Following a period of disappointment, Japanese small caps are expected to outperform their larger counterparts in 2008

After their recent period of disappointment, smaller companies in Japan are expected to outperform their large-cap counterparts in 2008. A look at the current macroeconomic background, not only domestically but also internationally, helps to explain this thinking. Importantly, for example, the slowdown of the US economy - and the strengthening of the yen against the US dollar - is expected to put downward pressure on large manufacturing, export-oriented companies that rely heavily on exports to the US. Indeed, export data from September and October shows that sales to the US have already ...