We believe that Japan's premium (price-to-earnings) multiple is justified given the lower level of interest rates and higher earnings momentum we expect.

If the primary cause of rising interest rates is growing demand for capital, then this should be regarded as a 'good' rate rise.

Japanese equities remain attractive relative to other developed markets.

Our new fiscal year 2007 profit forecasts call for a fifth consecutive year of double-digit profit growth, driven by solid top-line growth as well as labor cost reductions.

We would argue Japan is still attractive even though its PE is high because of the growth rate of the E.

I thought there might be more of a rise, but I'm not surprised (the Nikkei) ended lower. Domestic concerns are outweighing the external factors right now.