Neutral outlook for Japanese market

HSBC has been examining prospects for investors in the Japanese market concluding that they should buy the dream and sell the reality. It is optimistic about the prospects for restructuring, particularly for proposals to clear up bad debts in the banking sector there. This may result in more downward pressure on growth and profits but it believes this downside is limited. Nonetheless, HSBC says the Japanese market is unlikely to make major headway until later next year. The other major factor affecting growth prospects is external demand which is affected by a slowdown in the world economy. On a positive note, the impact of deregulation and capital market reform will deliver benefits but these are unlikely to materialise for some years yet. It is remaining neutral in its global equity portfolio in that market.