The war beyond Japan

In some other countries, current leaders who are not facing the same kind of short-term crisis as the Abe government in Japan have reached a very different conclusion. For them, the long-term benefits outweigh the short-term pain of the currency wars.

Singapore, for example, seems to have concluded that if a country wants to ride the rise of Asian economies to become one of the top global financial centers, a sound, predictable currency is a big plus. It tightened monetary policy in 2012 to fight inflation that ran at 4.6% in 2012. That knocked down growth below levels in regional economies such as the Philippines and Indonesia.

The rewards, however, are that Singapore's bonds are rated AAA (in a world with increasingly fewer AAA-rated countries) and that it can borrow at low interest rates. The yield on the 10-year government bond is just 1.33% versus 4.53% in the Philippines and 3.69% in Thailand.

I think this is a huge edge for the Singapore Stock Exchange (SGX.SP) over the long term. Reports of negotiations between the Singapore Exchange and LCH Clearnet, Europe's biggest derivatives clearinghouse, if true, suggest that the Singapore Exchange fully intends to push its advantage.

So how do you play currency wars?

So what does my perspective on the currency wars mean to you as an investor?

It says that when you see a country announce that it is about to advance into the wars with banners flying in the short term, you should buy shares of that country's leading export companies. I'd recommend that play for Japan for the next few months, until the rising costs of things like energy start to outweigh the rising earnings from a weaker yen.

Other countries that are likely to play this game include Brazil, where the government of Dilma Rousseff is torn between defending Brazil's manufacturing sector in the short run and prodding those companies (and the economy generally) into greater efficiencies. Switzerland, which I'd once have put in the solid-money camp, has linked its currency to the euro, indicating that it will stand for just so much pain from a strong Swiss franc.

France, as recent calls to battle from President François Hollande indicate, would love to pursue a weak franc policy -- but, whoops, there is no franc. The French economy may be weakening faster than any other in the eurozone, and French companies may be facing a terrible competitive disadvantage from a strengthening euro, but Germany has been adamant in its opposition to weakening the euro. In recent remarks, European Central Bank President Mario Draghi has indicated that he sees the economic pain a strong euro is inflicting, but he doesn't seem to feel pressed to do anything to weaken it.

I'd look to pick up shares of French sector leaders such as Danone (DANOY), which trades as BN.FP in Paris, or Louis Vuitton Moët Hennessy (LVMUY), traded as MC.FP in Paris, on strong euro weakness in the coming weeks. I think the euro will retreat again in the second half of the year.

As a debtor country, the United States wouldn't mind seeing a weaker dollar, but the Federal Reserve isn't going to do anything to suggest an official policy of devaluing the dollar because any increase in interest rates would devastate the budget.

Countries that look as if they'll stay out of the wars and reap long-term rewards from the gains in credit rating and financial reputation that come with that include Chile, Norway, Canada and Australia (though Australia may stay out of the wars not so much out of conviction as out of policy muddle). Sweden, which has a reputation for financial stability, is showing signs of wavering as its export companies feel the pain of a strong currency but seems likely to -- mostly -- hold to recent policies.

One way to profit from long-term advantages of nonparticipation in the currency wars is to look to financial institutions in these countries that -- like the Singapore Stock Exchange -- will be able to turn a reputation for stability into a competitive advantage. I think that includes banks in these countries that will be able to use that strength to move out onto a regional stage from the national markets. Four to watch would be CorpBanca (BCA) in Chile as it moves out into the rest of Latin America, Westpac Banking (WBK) in Australia, and Canada's TD Bank (TD) and Bank of Nova Scotia (BNS). The two Canadian banks are moving on different strategies, with TD Bank targeting the U.S. market and Bank of Nova Scotia headed into developing economies. Both, though, get an edge because Canada has steered clear of the short-term currency wars. (Westpac Banking is a member of my Dividend Income portfolio.)

Updates to Jubak's Picks

These recent blog posts contain updates to the stocks in Jubak's market-beating portfolios:

Click here to become a fan of MSN Money on Facebook

At the time of publication, Jim Jubak did not own or control shares of any company mentioned in this column in his personal portfolio. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not now own positions in any stock mentioned in this post. The fund did own shares of CorpBanca, Louis Vuitton Moët Hennessy, Singapore Stock Exchange and Westpac Banking as of the end of September.Find a full list of the stocks in the fund as of the end of September on the Jubak Global Equity Fund website.

Meet Jim Jubak at the MoneyShow Las Vegas

MSN Money columnist Jim Jubak will be one of dozens of financial experts on hand at the MoneyShow Las Vegas, May 13-16, at Caesar's Palace in Las Vegas. And admission is free for MSN Money readers. Just click here to register, and click here to see what Jubak plans to talk about.

Can't make the show? You can log on live and watch Jubak's presentation on "3D printing in 30 minutes," as well as a panel discussion with Jubak and other MSN Money bloggers, "Top stocks from MSN Money's Top Stocks." Click to register in advance, then return for the free webcasts.

Jim Jubak's column has run on MSN Money since 1997. He is the author of the book "The Jubak Picks," based on his market-beating Jubak's Picks portfolio; the writer of the Jubak's Picks blog; and the senior markets editor at MoneyShow.com. Get a free 60-day trial subscription to JAM, his premium investment letter, by using this code: MSN60 when you register at the Jubak Asset Management website.

Click here to find Jubak's most recent articles, blog posts and stock picks.