Psssst! Want to buy Japanese car makers below book value? Now is the time. Spooked by the strong Japanese Yen, stocks of export-heavy Japanese automakers such as Toyota and Suzuki can be had for less than the assets on the books.
Toyota can be bought at a price to book ratio of 0.99. Suzuki is a bargain at 0.94. Mazda Motor, Sony, and Sharp can be had for less than they are worth. The reason? An obscenely strong Yen that is at its highest level in 15 years. (Please remind to shove worthless dollar bills down the throats of any foreign exchange challenged people who still claim that the Yen is artificially low.) But there are also “growing concerns about an economic slowdown abroad.” And you know who they mean with that.
Disconcerting trend: In times of crisis, such as when the existing home sales drop 27 percent, there is a flight to quality. That used to be the Yankee Dollar. Suddenly, it’s the currency of that down and out country called Japan that is assumed to be the safest bet. Isn’t that a bit worrisome?
What’s even more worrisome is that Japanese analysts remain cautious. “Stock indexes showing bargains are not enough to encourage them to start buying again,” says market analyst Masayuki Doshida at Matsui Securities Co.
Back to cars: A strengthening Yen means that manufacturers such as Toyota have to move more product ion abroad. That’s good for jobs. But it takes a while. Short and mid-term, the winners are the export-heavy Europeans, i.e. the Germans. Volkswagen profits heavily from a low Euro. BMW and Daimler were saved from assured extinction by this situation. But pssst again: If the business climate in Europe improves, the currency might improve with it.