Japanese Growth Set to Continue, Baring Asset Management Says: 'Recovery is Modest, but the Prognosis is Optimistic'.

Business Editors

BOSTON--(BUSINESS WIRE)--March 1, 2004

Baring Asset Management (BAM), the global institutional investment management firm, believes that despite successive false starts in the 1990s and early this decade, economic conditions in Japan are finally changing. BAM has based its bullish views on the quickening pace of economic growth in Japan, a slowdown in price declines, and a growth in business confidence. In the twelve months ended January 2004, the Tokyo Stock Exchange (Topix) index rose by more than 27 percent.

"Now is the time for investors to consider reallocating to the Japanese equity market," said Hayes Miller, Senior Vice President and member of Baring Asset Management's Global and EAFE portfolio management team. "While not spectacular, Japan has seen consecutive economic growth for four quarters. This confirms that recovery is continuing."

Mr. Miller noted that the reluctance of Japanese companies to spend money on capital goods or hiring staff has been one of the main components of the country's protracted economic slump.

"We are now starting to see capital spending levels increasing again," says Mr. Miller. "In fact, growing levels of capital spending and exports have become the drivers of the modest recovery in Japan."

According to BAM, the growing levels of capital spending in Japan reflect an increased level of business confidence. Last December the Bank of Japan's quarterly Tankan survey of business confidence hit a six-year high, with many of the largest firms, especially car makers, believing that business conditions are much improved.

Retail sales in Japan rose in September 2003 for the first time in nearly three years, suggesting that confidence is on the rise. Prices continue to fall, in spite of the best efforts of the Government, although the rate of decline has slowed. That means there is no real pressure for interest rate rises in the short term. This in turn should be beneficial to stock market growth.

"We expect economic data to continue to improve, with Japanese companies proving very responsive to sales growth, having been through successive waves of cost cutting," said Mr. Miller. "We continue to favor economically sensitive companies in our portfolios, with an allocation to smaller companies, although we may look to allocate into some of the sectors where the prospects are not yet recognized by the market as 2004 continues."

About Baring Asset Management

Baring Asset Management is part of ING Group, one of the largest financial institutions in Europe. ING Group employs over 115,000 people in over 60 countries.

BAM follows a Growth at a Reasonable Price (GARP) equity investment strategy. Its approach focuses on identifying favorable earnings surprise and valuation characteristics through fundamental research, and it seeks companies, sectors and markets whose attractive growth prospects are not fully reflected in their prices.

More information about Baring Asset Management can be found at www.baring-asset-us.com.