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rffrydr
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 Posted: Fri Mar 03, 2006 12:25 am Post subject: JAPAN |
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Core rate up .5%; 3 in a row:
"Mitsubishi UFJ Securities senior strategist Naomi Hasegawa said remarks this morning by Prime Minister Junichi Koizumi fueled conjecture that the central bank will soon end its present policy.
'[Changes in] consumer prices are coming in above zero and we are seeing signs of getting out of deflation,' Koizumi told a parliamentary committee.
His comments were his most positive yet on recent indications that the economy is winning its battle with falling consumer prices. Previously, Koizumi had insisted that it was too soon to say that the economy was coming out of deflation."
Bonds and stocks were short going in. End-of-day showed resiliency, (complaceny?)
Hey Henry, Devil's advocate: with Japanese debt at a Godzilla-sized 160% GDP on the worlds fastest aging population (and most afraid of foreign workers) do they have any choice BUT to reflate their way out? And politicians want a decade for "reforms."
An end to quantiative easing may be announced at the end of Japanese Fiscal Year--but this could take a long, long time to play out. Markets 1st "verdict."
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rffrydr
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HenryTo
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| Posted: Tue Dec 04, 2007 7:00 pm Post subject: |
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Corporate profits in Japan dropped during the third quarter, for the first time in five years. Following article is courtesy of the WSJ:
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Profits Decline in Japan Amid Rising Energy Costs
First Drop in 5 Years Is a Worrisome Sign For Economic Growth
By TAKASHI MOCHIZUKI
December 4, 2007; Page A8
TOKYO -- Profits at Japanese companies dropped for the first time in five years in the July-September quarter, casting a shadow over the country's economic recovery.
Profits fell 0.7% to 13.294 trillion yen ($119.63 billion), marking the first decline since the April-June 2002 period, the Ministry of Finance said yesterday.
A ministry official said the sharp rise in energy prices pushed up costs, which weighed on earnings. Profits are likely to decrease further due to the rise in oil prices in October and November, he said.
Falling profits are a worrisome sign for Japan, because a strong corporate sector has supported the economy's recovery in recent years. A worsening bottom line could prompt companies to cut back on business investment, hurting the overall economy. It could also weigh on wages and employment, at a time when consumer spending remains sluggish.
"Softening profit growth is worrying and points to downside risks to the outlook for [capital expenditure] and wage growth," said Lehman Brothers economist Hiroshi Shiraishi.
Separate data from the labor ministry showed that Japanese workers' earnings in October remained flat from a year earlier, following a 0.6% drop in September.
The finance ministry data showed that capital expenditures, including software investment, dropped 1.2% in the third quarter from a year earlier to 13.911 trillion yen. It was the second straight quarter of decline, but not enough to affect third-quarter gross domestic product data, due Friday. A preliminary reading last month showed that Japan's third-quarter real GDP grew 0.6% quarter-to-quarter, or 2.6% on an annualized basis.
Meanwhile, third-quarter corporate sales growth slowed to 2% from the same period last year, the slowest pace in 18 quarters. Sales grew by 3.3% in the previous period.
"The results were a bit weaker than expected," said Yasuo Yamamoto, senior economist at Mizuho Research Institute. "The Japanese economy's growth may be coming to an end. A slower expansion of sales and rising costs are its typical phenomenon."
The Ministry of Finance data indicated that weak spending in the non-manufacturing sector, and especially the service sector, dragged down overall capital spending. |
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HenryTo
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| Posted: Mon Nov 26, 2007 5:22 pm Post subject: |
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"Re-regulation" hurting the prospects of Japan going forward. Given bounce in the Japanese Yen, the inevitable slowdown of the US and Western European economies (not to mention continued tightening in South Korea and China, there is a good chance that Japan could enter a recession sometime in 2008 (could we see the Nikkei to Dow Industrials ratio trade at parity again?):
http://www.bloomberg.com/apps/news?pid=20601109&sid=aoZ1Mc8y2IAQ&refer=home
| Quote: | A new measure to ensure that salespeople thoroughly explain investment risks provides yet another example of unintended economic consequences.
`Off a Cliff'
``Mutual-fund sales are falling off a cliff,'' says Jesper Koll, president of Singapore-based hedge fund Tantallon Capital Advisors Pte. The law adds 45 minutes of paperwork for investors and ``as a result, people are walking away,'' he says.
Money flowing into stock-focused mutual funds fell to 366 billion yen in October from an average of 1.37 trillion yen in the previous 12 months, the Investment Trusts Association of Japan said Nov. 13. Only 16 new funds directed toward individual investors were launched in the month, compared with about 35 funds each month during the past year.
``Some banks are reporting that sales have dropped by half,'' says Tomoya Asakura, chief operating officer of Morningstar Japan KK in Tokyo. ``Others have dramatically lowered their sales targets.'' |
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rffrydr
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rffrydr
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| Posted: Mon Nov 26, 2007 9:38 am Post subject: |
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Japan vs. China? How about one and the same? JGB's biggest fall in long time as Chinese money eyes investment:
http://www.reuters.com/article/bondsNews/idUST27819620071126
That it's taken so long for this to even be a rumour; that so many indices have been created "ex-japan" shows the cultural legacy of this region--shows it overriding economics.
You could say that this china boom began with japanese money. That would be a gross oversimplification. Yet here we are, full circle.
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HenryTo
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| Posted: Thu Nov 22, 2007 10:00 pm Post subject: |
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An update on Japan's subprime exposure:
http://www.news.com.au/heraldsun/story/0,21985,22807889-31037,00.html
| Quote: | JAPAN'S large banks had about 1.2 trillion yen ($12.75 billion) invested in products related to the US subprime mortgage market as of the end of September, Japan's financial regulator said on Thursday.
The estimate from the Financial Services Agency comes a day after Mitsubishi UFJ Financial Group, Japan's largest lender, reported its first-half earnings.
Japan's three biggest banks -- the so-called "megabanks" -- have more than 460 billion yen in subprime exposure, according to their first-half earnings results.
Although Japanese lenders have fewer investments in securities related to risky US mortgages than overseas rivals, they have not escaped the subprime turmoil unscathed. |
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rffrydr
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rffrydr
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| Posted: Sun Nov 18, 2007 9:11 am Post subject: |
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| Quote: | | NO STOCK MARKET HAS DISAPPOINTED global investors as often as Japan's |
--that about says it....unintentionally. You might even exaggerate and say all that there is to the Nikkei is the foreign investor. Retail--that's what's been lost. Lost on a generational scale. And a model for what's possible for our own retail market.
Funny, they don't mention the late-great TOPIX mid-cap sector, the source of the last foreign push into japan earlier this year. In Japan we have a touchstone on just how much "the deal" has played in the last few years, right here. Otherwise japan's exposure to china is much greater than ours--their Kiretsu (re)structure, as I've pointed out before, prefiguring the China boom. And there is much observe in what japan doesn't send to China in this regard.
Hedge-funds have been stymied. But the rising yen makes this trade worth a look. $95 oil however makes me look away.
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HenryTo
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| Posted: Sun Nov 18, 2007 1:35 am Post subject: |
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Barron's getting bullish on Japan. Interesting that they mentioned Nomura - the company now has a market cap of around US$31 billion, compared to $76 billion 20 years ago (when it was 18 times the size of Merrill), just prior to the October 1987 crash:
http://online.barrons.com/article/SB119526244805596512.html?mod=b_hps_9_0001_b_this_weeks_magazine_home_left
| Quote: | NO STOCK MARKET HAS DISAPPOINTED global investors as often as Japan's, but that sorry record may soon end.
There's no question Japan has doddered in 2007, even as investors rushed for stocks in China, India and the rest of Asia. Japan is down 12% so far this year, compared with gains of 3% and 4% for the U.S. and Europe, respectively.
Most global investors have slashed exposure to Japan to about 16% of their portfolios, versus the 21% allocation in Morgan Stanley Capital International's benchmark Europe Australasia Far East index. Indeed, the funds most bullish on Japan are those whose mandates force them to mirror this index. Japanese stocks remain vastly below their highs, set in 1989 -- as if still mired in the long, deflationary aftermath of an economic bubble that burst almost 20 years ago.
In fact, sentiment is so dismal that the stage is set for a rally.
Gone is the three-digit multiple: Japanese stocks trade today at a price-earnings ratio of 15.4, about the same as U.S. shares, with earnings growing somewhat faster, but with interest rates sharply lower than America's. Japan's stock-market value as a percentage of its economy is among the lowest of the G-7 nations -- the developed world's top economies. It is certainly the cheapest on a price-to-book-value basis.
The single measure with "an unblemished track record of spotting times to buy" is about to start flashing green, according to Japan strategist Jonathan Allum of KBC Financial Products in London. That signal comes whenever the dividend yield on Japanese issues exceeds the yield on Japanese government bonds. Stocks now yield 1.46% -- just under 1.48% on the relevant government bond. (In contrast, the yield on U.S. shares is less than half that of the equivalent Treasury.)
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Indeed, earnings have been so good that investors worry they've topped out. Returns on equity have hit a ceiling of 11.6%, partly because Japanese companies are wary of boosting leverage.
What could help? Consolidation. And mergers are already on the rise, changing the landscape in banking, pharmaceuticals and retailing. When Citigroup bought Nikko Cordial this year, Japan at last saw a major takeover by a foreign company. It also saw its first hostile takeover attempt by one domestic company for another, although Oji Paper failed to buy Hokuetsu Paper Mills.
Shigenobu Nagamori, CEO of the Kyoto-based components firm Nidec, has expanded his company rapidly through acquisitions. "Good or bad, all Japanese stocks are being sold off," says Nagamori. "People are disappointed to see takeover defenses and political instability. But more and more, Japanese companies are becoming globalized -- growing more efficient through competition. About one-third of the Nikkei's sales come from abroad, more than in the S&P 500. "Foreign investors are too pessimistic about Japanese stocks," Nagamori adds. "This is the bottom of the market."
Certainly, Japanese companies could use capital more effectively. UBS points out that a third of TSE First-Section companies are debt-free, making those like Takeda Pharmaceutical (ticker: 4502.Japan), Sony (SNE), Nintendo (7974.Japan) and Canon (CAJ) big holders of net cash. If Corporate Japan boosted leverage, increasing total assets to, say, 3.5 times shareholders' equity, and produced a net margin of 4.5% (from 2.8 times and 3.8%, now), return on equity could hit 15.8%, near U.S. and European levels, Goldman reckons.
Japanese companies now pay just a fifth of earnings as dividends, yet the dividend pool is growing at a 20% annual clip. John Vail, a strategist at Nikko Asset Management in Tokyo, believes the payout ratio will hit 30% by 2011, making it comparable to the U.S. level. That would go a long way to lure Japanese investors, hit by negative rates, to return to domestic stocks.
At the moment, a tiny fraction of the assets in postal-insurance contracts -- a popular form of savings in Japan -- are invested in equities. "There's no domestic bid: Mrs. Watanabe is going after anything with a yield outside Japan," says Goldman Sachs strategist Kathy Matsui. As a result, foreigners now account for two-thirds of the Japanese stock market's turnover.
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IF YOU BELIEVE JAPAN IS poised to rally, brokers like Nomura Holdings (NMR) or asset managers like Abe's Sparx (8739.Japan) look attractive, particularly if domestic investors come back home.
Also worth considering: exchange-traded funds that focus on Japan, such as iShares MSCI Japan (EWJ), as well as mutual funds that do the same.
Some investors are taking a flyer on Japanese small-caps, which collapsed last year but have started to revive. Warren Yeh of Adapa Partners in New York is a fan of DeNA (2432.Japan). The company operates the nation's largest social-network site for mobile phones, was founded by an ex-McKinsey consultant and, he says, has "provided two consecutive quarters of earnings surprise."
Larry Jeddeloh, who pens the Institutional Strategist newsletter, has been recommending Japan Small Cap Fund (JOF). "The over-the-counter market is just on sale," says Jeddeloh. "I'm a simple guy. I look at Japan -- they have record profits, record dividend payouts, more M&A than ever done this year, and they have a record amount of stock buybacks. And the market is down! This market is just too big and too important to ignore." |
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rffrydr
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HenryTo
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HenryTo
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| Posted: Tue Oct 30, 2007 11:16 pm Post subject: |
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Japan still struggling with deflation:
http://www.bloomberg.com/apps/news?pid=20601087&sid=arA5optiNh1c&refer=home
| Quote: | | Monthly wages, including overtime pay, fell 0.5 percent from a year earlier, a ninth decline in 10 months, the Labor Ministry said today in Tokyo. Summer bonuses, which typically amount to about 10 percent of a worker's annual income, declined 1.1 percent, the first drop in three years. |
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HenryTo
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HenryTo
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| Posted: Fri Oct 26, 2007 12:51 am Post subject: |
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Just when you think it can't get any worse:
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Japan Food Safety Comes Under Scrutiny
Friday October 26, 1:00 am ET
By Hiroko Tabuchi, Associated Press Writer
Scandals Over False Labeling Shatter Japan's Reputation for Food Safety, Quality
TOKYO (AP) -- Ocean fresh sushi? Quality marbled beef? Exquisite confections? Think again. Japan has been hit by a slew of food safety and false labeling scandals that threaten to wreck its image as a country of culinary wonders, squeaky-clean factories and impeccable sanitation.
In the most recent scandal, a venerable maker of traditional Japanese sweets was found to have recycled the red bean filling in its rice cakes, collecting old filling from leftover boxes and shipping them out as new.
Investigators also found that Akafuku Co., based in western Japan, had long misguided consumers by shipping out old sweets it stored in freezers after they were stamped with a production date that was actually the date old cakes were thawed.
"I knew what we were doing was wrong," a grave-looking Akafuku President Noriyasu Hamada told reporters Tuesday. "The responsibility lies with me."
Those revelations came on the heels of a raid by health authorities of meat processor Meat Hope Co. in northern Japan on suspicions it falsely labeled pork, chicken and beef mixture as pure ground beef -- a practice media reports said had gone on at least two decades. Its president was arrested Wednesday for violating Japan's competition laws, which ban the false labeling of products.
A separate meat processor was accused last week of taking meat from retired roosting chickens -- which the company had bought at rock-bottom prices -- and shipping them out as top-quality free-range chicken.
While there have been no reports of illness or food-poisoning related to any of the scandals, they have dominated local media and alarmed Japanese shoppers.
The incidents also come as Japanese consumers -- appalled over rampant product safety problems in neighboring China, a major trading partner -- had been turning to domestic produce as a sure sign of quality.
"I've always tried to buy domestic because I thought that was safer, but now I can't trust anybody," said Toshie Kano, 72, a retiree grocery shopping at a supermarket in central Tokyo.
"These companies can't cut corners with things we eat. Just imagine what we've been feeding our children," she said.
The scandals have not been confined to regional companies. Fujiya Co., one of Japan's top confectioners, admitted in February to having used out-of-date milk, cream and eggs in cream puffs distributed nationwide. Cookie maker Ishiya Trading Co. followed suit, recalling its sweets after it admitted falsifying expiration dates to get rid of excess stock.
Analysts say that a persistent price war in Japan's food industry has squeezed profits, especially at smaller companies, and spurred them to cut corners.
They also worry that the scandals have hurt the image of Japanese food overseas at a time when companies here are looking to expand internationally to augment sluggish profits at home.
"This is a big blow for food companies who want to start international operations or boost overseas sales," said Hiroshi Saji, an industry analyst at Mizuho Securities. "These scandals have tainted the Japan brand."
Authorities, meanwhile, have struggled to police violators.
"The recent violations are so flagrant, we're looking at a moral problem and that's hard to regulate," said Health Ministry official Takashi Tagami. "Perhaps we need to increase penalties for offenders."
The latest scandals have even raised suspicion over the authenticity and safety of some of the nation's favorite dishes, including sushi, marbled beef and shark's fin.
Discount sushi stores frequently use cheap substitutes for delicacies like eel and sea bream, local media allege. For example, a freshwater species called the Nile tilapia, caught in Egypt, is reportedly served as sea bream in many outlets.
Other fake foods "exposed" by local media include fatty tuna mixed from tuna bits and pork lard, shark's fin made from gelatin, and a bizarre reconstituted egg-in-a-tube that is often used in packed lunches and salads.
Japan has not been immune to food scares. In 2000, Snow Brand Milk Products Co. shipped old milk and sickened more than 14,000 people, the country's worst-ever outbreak of food poisoning. |
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