Japanese Consumer Electronics Stocks Rally after Golden Week

The Nikkei has lagged most global benchmarks year-to-date. The holiday-shortened trading last week didn't help, as it was in the middle of earnings season and at a time when U.S. stocks were climbing to new highs.

Still, this is truly a great time for Japanese consumer electronics companies because (1) of the weak yen, trading at an all-time low against the euro and trading at a favorable 120 against the dollar, and (2) because of increasing demand from emerging markets, most importantly, China.

What's worrisome is the state of the U.S. economy and consumers and of course, Japanese consumers. The latter could be the wild card that sends Japanese stocks off to the races in the second half of the year, ahead of the Beijing Olympics next year. What I mean is, there needs to be a catalyst for bulls to get excited about Japan again, like they were in the second-half of 2005.

I don't expect the yen carry trade to unwind in the near-term given all the fun everyone is having with the spreads and liquidity. In fact, with real-estate having peaked in some global markets, it seems stocks are the best place (and easiest) to put money for many investors.

That said, after successive three-day and four-day holidays, Japanese stocks rallied on Monday, as the Nikkei gained 1.6% to 17,669.83 for its highest close since April 11.

Leaders among consumer electronics ordinary listings with ADRs include:

Canon (JP: 7751) (CAJ) +4.1% to ¥7,090 ($59.13 ADR equiv. at ¥119.9/$1; $57.40 Fri. close) [new all-time high]
Nintendo (NTDOY.PK) +2.7% to ¥39,700 ($41.39; $40.40 Fri. close) [new all-time high]
Sony (JP: 6758) (SNE) +2.3% to ¥6,560 ($54.71; $53.95 Fri. close)
Matsushita (JP: 6752) (MC) +2.1% to ¥2,460 ($20.52; $20.36 Fri. close)

Also, I mentioned weakness in auto stocks year-to-date in an earlier post. They also rallied today:

Honda (JP: 7267) (HMC) +1.73% to ¥4,110 ($34.28 ADR equiv. at ¥119.9/$1; $33.83 Fri. close)
Nissan (JP: 7201) (NSANY) +1.41% to ¥1,222 ($20.38; $20.33 Fri. close)
Toyota (JP: 7203) (TM) +0.55% to ¥7,270 ($121.27; $120.93 Fri. close)

Disclosure: The author does not own shares of any companies mentioned above.