Like many other Japanese investors, Hiroo Sato got burned a decade ago when this nation's speculative bubble burst. Today, he's finally getting some of his money back in a rebounding stock market.
But the 71-year-old retired bank executive is also putting more than a fifth of his money into a foreign investment -- low-risk variable annuities from the US insurer Hartford Life.
Overseas investments, long shunned, are giving this country's latest economic recovery a greater likelihood of success than its past, abortive comebacks.
"In the bubble days, Japanese companies didn't care about new ideas from foreign companies," said Debbie Howard, president of the American Chamber of Commerce in Japan. "The prolonged economic slump has forced Japanese busi-nesses to look at new and different ways of doing things."
That includes letting foreigners invest in and manage Japanese firms.
Japanese stocks held by foreign investors reached a record high in the fiscal year ended March 31, at 22 percent, as the main index for the Tokyo Stock Exchange surged 46 percent, rallying from a 20-year low hit in April last year.
Foreign direct investments in Japan totaled 2.1 trillion yen (US$19 billion) for fiscal 2003, more than quadrupling from a decade ago, according to government data, although that's still a fraction of foreign investments in the US or Europe.
Among the recent high-profile investments are French automaker Renault in Nissan Motor Co, Wal-Mart Stores in the Seiyu retail chain and Vodafone in a Japanese carrier that now has the British mobile giant's name.
Individual investors are also embracing the idea, buying alternatives like Hartford Life's annuities.
Sato said he learned the hard way the superiority of American financial services to Japanese investments.
Now, "I think this time the recovery is for real," he said.
Analysts agree that the recovery could last, in contrast to the last two "phantom" upturns during the last decade, which fizzled out almost as quickly as they came.
For the quarter from January through March, the economy grew at an annual 6.1 percent as solid exports to the US and Asia combined with a boost in consumer spending in Japan for the best showing in a decade.
Last month, the central bank issued its most upbeat assessment of the economy since the bubble, noting that growth was gathering momentum from improved employment and industrial production.
The optimism about the economy is also coming from Japanese companies whose gadgets are in high demand at home and abroad.
Top companies such as Toyota Motor Corp and Sony Corp are increasingly counting on overseas revenue to propel earnings.
Still, the improvement in the economy could not be happening without foreign help, and many Japanese are grateful.
"The old aversion about takeovers has faded," said Kohei Shiino of the government-backed Japan External Trade Organiza-tion, which promotes trade and investments.
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