Pictet Asset Management's Japan Market View

[REMOVED GRAPHICS] Press release Pictet Asset Management's Japan Market View WEDNESDAY, 02 APRIL 2003 JAPAN: OPPORTUNITIES EXIST DESPITE DIRE ECONOMIC SITUATION Leading specialist asset manager Pictet Asset Management considers that very low sentiment, rising dividends and corporate restructuring in Japan is creating a number of bottom-up opportunities in the market despite the very weak macro-economic backdrop. Richard Heelis, Head of Japanese Equities and portfolio manager of the award-winning 1) Pictet Institutional Funds - Japanese Equities Fund commented: "Japanese equities might well have plunged to 20 year lows - economic and geopolitical uncertainties have taken their toll on Japanese equities in recent weeks, with the Nikkei 225 index plunging to its lowest level since 1983 - but it's not all bad, there's nothing quite like a weak market to stimulate a policy response." "What's more, corporate Japan has been somewhat less reluctant to implement change and restructuring efforts have been an encouraging sign. Rising dividends and the increasing popularity of share buybacks suggest Japanese companies are beginning to understand the importance of returning earnings to shareholders," added Mr Heelis. Mr Heelis considers that, given the pitiful macro-economic backdrop, Japan is very much a bottom-up investment story and is likely to remain so for some time. "We therefore continue to focus on companies with more secure earnings prospects and relatively strong balance sheets. The fact that sentiment is so low is positive for the longer-term outlook for Japanese equities." "Individual share ownership is low - 83% of people recently surveyed wouldn't touch equities - this number was 90% in 1948 in the US just ahead of a 20 year bull rally (i.e. sentiment is very low). Further weakness seems likely in the short-term, but this may well provide an excellent opportunity for investing in Japan." There are negatives in the market at present in Pictet's view. "There's no escaping the fact that Japan's economic situation is dire. Prime Minister Junichiro Koizumi has been slow to deliver the reforms he promised when he came to power two years ago and as a result, macroeconomic conditions just seem to keep on deteriorating - Japan's deflationary spiral continues, business activity remains sluggish, unemployment keeps on rising and consumers remain reluctant to spend. With global growth slowing, the outlook for exports is more subdued and this certainly doesn't bode well, particularly given the recent strength of the yen against the dollar. The combination of these factors point to a tough operating environment for corporate Japan in the months ahead and earnings will probably need to be revised down," said Mr. Heelis. "The continued existence of the mass of small, inefficient, debt-ridden firms is acting as a significant drag on the Japanese economy. Things are likely to get worse before they get better - the number of bankruptcies is likely to rise considerably over the next couple of years (a necessary evil if bad loans are dealt with properly)," commented Mr. Heelis. "Banks and insurance companies still need to unwind cross-shareholdings. But, for those investors willing to look beyond the obvious bad news, there are stock-picking opportunities to be taken." For further information, please contact : Jo Ongert Senior Manager Pictet Asset Management Direct line. +44 20 7847 5411 Switchboard. +44 20 7847 5000 E-mail. jongert@pictet.com Billie Clarricoats Lansons Communications Direct line. +44 20 7294 3688 Switchboard. +44 20 7490 8828 E-mail. billiec@lansons.com Frank Renggli Press Officer Pictet & Cie Direct line + Switchboard + E-mail: frenggli@pictet.com David Masters Lansons Communications Direct line. +44 20 7294 3687 Switchboard. +44 20 7490 8828 E-mail. davidm@lansons.com Notes to Editors Pictet Asset Management Pictet Asset Management (PAM) is the institutional business division of Pictet & Cie, the largest private banker in Switzerland. Pictet & Cie was founded in 1805 in Geneva and is wholly owned by eight partners. Total assets under management amount to over £50billion, placing Pictet among the largest independent asset managers based in Europe. PAM includes all the operating subsidiaries and divisions of the Group that carry out institutional asset management. Assets managed by PAM alone amount to over £21 billion, sourced from 'blue chip' clients worldwide and invested throughout the world's equity and fixed income markets. With eight centres around the world, PAM enjoys a global reach, extending from Geneva, London Frankfurt, Milan and Zurich to Tokyo, Singapore and Montreal. Pictet & Cie. carries the highest possible individual bank rating from leading credit agency Fitch and has more than three times the capital required under Swiss Banking Law. Pictet Asset Management UK Limited is regulated by the Financial Services Authority. Pictet Institutional Fund Japanese Equities Fund Fund Manager Richard Heelis Domicile Luxembourg Legal Status Luxembourg FCP - Part 1 Country of registration UK, Germany, Luxembourg, Sweden Inception date 25 September 1967 Size JPY2.5 billion No. of positions 36 S&P Micropal European Awards 2003 - 1st Place Equity Japan over 1 year ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2003/04/02/20030402BIT01390/wkr0001.doc http://www.waymaker.net/bitonline/2003/04/02/20030402BIT01390/wkr0002.pdf