JAPAN

[rffrydr]

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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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Japan ramps up its bailout package - to be implemented starting tomorrow:

http://www.yomiuri.co.jp/dy/national/20081027TDY01304.htm

[rffrydr]

This the best kind of news you could ever expect for jap. small-cap.
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Japan unveils its own "bailout" package:
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Tokyo unveils financial steps, stocks surge
Tue Oct 14, 2008 3:10am EDT

By Leika Kihara and Elaine Lies

TOKYO (Reuters) - Japan unveiled steps to stabilize its financial markets and said authorities were on "heightened alert," despite a record surge in share prices that mirrored global gains inspired by a chorus of international measures.

Tokyo's Nikkei share average .N225 surged more than 14 percent on Tuesday, the biggest one-day gain in its 58-year history though far short of last week's 24 percent loss. .T

Among the steps the government announced before the stock market opened was a possible injection of public funds into regional banks that it said would be aimed at enhancing smooth financing for smaller firms facing a possible credit crunch.

Finance Minister Shoichi Nakagawa said in a statement that Japan's financial system was relatively stable and sufficient and safety nets were already in place.

But he added: "I will continue to monitor on a heightened alert the impact of the recent rapid fall in the stock markets on Japan's financial sector and real economy."

In a sign the global crisis was taking a toll, Japanese consumer confidence fell to a fresh record low in September from three months earlier on a seasonally adjusted basis, a government survey showed.

Hoping to show the ruling bloc's economic policy prowess ahead of an election that must be held by next September, the No.2 executive in Prime Minister Taro Aso's Liberal Democratic Party said his coalition wanted to enact a second extra budget by the end of the fiscal year next March.

A supplementary budget to fund a 1.8 trillion yen ($17.54 billion) economic package, crafted before the financial crisis, is already expected to be passed by parliament as early as this week.

The main opposition Democratic Party, which together with smaller allies controls parliament's upper house, has agreed to back the initial batch of spending measures.

BIG TSUNAMI, LITTLE TSUNAMI

"A big tsunami is hitting the American continent and then Europe. After that, it may hit Japan and Asia," LDP Secretary-General Hiroyuki Hosoda told a news conference.

"The size of the tsunami may be one tenth of what it was in the United States or Europe as Japanese banks have not taken many risks since the bursting of the bubble economy," he said, referring to Japan's bubble of soaring stock and land prices of the late 1980s.

In a nod to concerns over Japan's bulging public debt, Aso told a parliamentary panel the government should not issue new deficit-covering bonds to fund a second extra budget.

Finance Minister Nakagawa, who also holds the financial services portfolio, said he would meet bank executives on Wednesday to urge them not to scale down lending activities.

He said the government would also consider a temporary freeze on the sale of government-held shares on the secondary market and it expected the Bank of Japan to take similar steps.

The government will also further deregulate share buy-backs by companies, consider expanding disclosure rules on short-selling of shares, and extend a safety net for life insurers beyond April 2009, the minister said.

Economists said the steps were welcome insurance in case of further market mayhem.

"Japan has been saying all along that its banking system is healthier than that of the United States and Europe. But if stock prices fall further, that logic might come under doubt," said Takahide Kiuchi, chief economist at Nomura Securities.

"As such, it's important to take pre-emptive measures such as creating a safety net for regional banks, and the government did just that. It's good the government is preparing for a worst-case scenario," he said.

The Nikkei finished the day up 14.15 percent, its biggest one-day rise in 58 years of trade.

Investors were encouraged by the huge gains on Wall Street and in Europe after pledges of more than 1 trillion euros ($1.36 trillion) by the governments of Britain, Germany, France and other European countries to bolster their banks .

The U.S. Treasury was expected to detail its own capital injection plans later on Tuesday.

Still, caution lingered.

"There's a relief that banks probably wouldn't go bankrupt thanks to money injection plans, but after some rebound, we will inevitably enter a phase to think about how that would actually impact the global economy," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

[rffrydr]

In all the excitement I missed this, first trade deficit in quarter-century:

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/26/AR2008092600968.html?hpid=topnews

50% dropoff in US exports. And corroborated in Korea:

http://english.chosun.com/w21data/html/news/200810/200810020011.html

Of course OIL is the first punch--which story you can follow, first, right here on MT:

http://marketthoughts.com/forum/oil-t6823.html
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

"Stagflation:"

http://www.ft.com/cms/s/0/3a00927c-7823-11dd-acc3-0000779fd18c.html
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Japan supports small business: not much, but doesn't take much.

http://www.marketwatch.com/news/story/japan-approve-37-billion-loan-guarantee/story.aspx?guid=%7B27C5C144%2D479E%2D4426%2D92BA%2DAB0C5E7DF3A7%7D
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Another acquisition by Japan, Inc - putting the total amount of foreign acquisitions by the Japanese this year at $39 billion, or double the entire total for all of last year. Deal is all cash.
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Japan's Ricoh to buy Ikon Office for $1.6 bln
Wed Aug 27, 2008 11:18am EDT

By Kiyoshi Takenaka

TOKYO (Reuters) - Copier and printer maker Ricoh Co Ltd (7752.T: Quote, Profile, Research, Stock Buzz) will acquire U.S. office equipment distributor Ikon Office Solutions (IKN.N: Quote, Profile, Research, Stock Buzz) for $1.62 billion, underscoring an acquisition spree by Japanese firms keen on overseas expansion.

Ricoh, which competes with Xerox Corp (XRX.N: Quote, Profile, Research, Stock Buzz), Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) and Konica Minolta Holdings (4902.T: Quote, Profile, Research, Stock Buzz) in printers and copiers, said it would pay $17.25 cash for each Ikon share, a premium of 11 percent to Tuesday's close of $15.56.

The deal is the latest in a string of overseas acquisitions by financially sound Japanese companies hunting for opportunities outside their mature home market.

Already this year, outbound acquisitions from Japan total $39 billion, according to Thomson Reuters data, nearly doubling the figure for all of 2007.

Office equipment makers have been snapping up distributors to strengthen their sales channels and product offerings.

"Ikon operates more than 400 sales and services locations mainly in Europe and the United States. It has long, and established business ties with many major customers in the U.S.," Ricoh President Shiro Kondo told a news conference.

"By combining the strengths of Ikon and Ricoh, we can create a strong business entity."

Ricoh said in a statement that the deal had been approved by the boards of both companies but is subject to regulatory approvals in the United States, Canada and Europe.

"By combining the strengths of Ikon and Ricoh, we can create a strong business entity."

Office equipment makers have been snapping up distributors to strengthen their sales channels and product offerings.

Xerox bought Global Imaging Systems for $1.5 billion in May 2007, while Konica earlier this year clinched a deal for Danka Business Systems' (DNK.L: Quote, Profile, Research, Stock Buzz) U.S. unit to boost its sales in the world's largest office equipment market.

CUSTOMER DEFECT?

Mizuho Securities analyst Ryosuke Katsura said the deal was a step in the right direction for Ricoh, but it might face challenges in retaining Ikon's customers and employees, which are important to its competitiveness.

"Some of its clients may want to keep using Canon products, and they might switch to a Canon distributor or to direct purchases from Canon," Katsura said.

"On Ikon employees, they have been handling many Canon products and have wide knowledge on Canon machines. Some of them could move to dealers that offer Canon products."

Ricoh said in a statement that the deal had been approved by the boards of both companies but is subject to regulatory approvals in the United States, Canada and Europe.

The Japanese company will finance the transaction mainly with external funding, CFO Miura said.

[rffrydr]

They're back. And they're going in smart if not big:

http://ftalphaville.ft.com/blog/2008/08/26/15353/are-japans-dealmakers-heading-back-to-pebble-beach/
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

What the local carry traders are now doing in Japan:
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In wounded world, Japan's taste for risk only grows
Thu Aug 7, 2008 12:05pm EDT

By Eric Burroughs - Analysis

TOKYO (Reuters) - Even as caution rules for investors around the world nursing wounds from the year-old credit crisis, Japanese households are still eager to take risks and buy exotic currencies in their relentless quest for higher yields.

In the past few months the South African rand has become the top currency for wealthy Japanese households buying uridashi bonds that are sold directly to them by securities firms, the first-ever Russian rouble uridashi was launched and the Brazilian real is now an option.

More surprisingly, Japanese currency day-traders, who make leveraged bets with borrowed funds, have snapped up the Australian and New Zealand dollars in a big, risky bet that their slide against the yen will be limited.

Such trades can backfire if those currencies fall sharply and wipe out the returns offered by higher rates. In the case of the kiwi, professional traders are worried that any rush to the exits by the Japanese day-traders could exacerbate any tumble.

But the hunt for yield in more exotic destinations highlights just how persistent Japanese investors are in selling their low-yielding yen to secure better returns via foreign currencies and bonds, especially with stock markets still looking shaky.

"Capital outflows are a structural trend in Japan," said Stephen Jen, chief global currency strategist at Morgan Stanley.

The persistent flow of funds out of Japan has served as a source of liquidity while many banks are hoarding cash, and it has kept the yen weak against a wide array of currencies.

The yen's real trade-weighted value -- the broadest measure of its performance -- hit a seven-month low in July, down 6 percent since March when it reached a 13-year peak against the dollar. Over the past five years, the yen's broad value has fallen by 17 percent.

Analysts link the search for higher returns abroad with a generational change in Japan's ageing society and a break with the conservative stance of keeping so much money -- about 750 trillion yen ($6.9 trillion) -- in cash and deposits often yielding about 0.5 percent.

Royal Bank of Scotland said in a report that the household shift to foreign assets was a "demographically based regime change" that created a headwind against any yen gains.

In July, Japanese workers investing summer bonuses were snapping up assets in Brazil and other Latin American countries.

Sixty-three new mutual funds were launched last month that attracted 338.4 billion yen ($3.2 billion). UBS Global Asset Management's Brazilian real bond fund was the most popular, according to data from fund tracker Lipper. The second most popular such "toushin" mutual fund was a UBS emerging currency vehicle.

At the same time, the government-affiliated mega asset managers -- the Government Pension Investment Fund, Japan Post Bank and others -- are slowly shifting funds out of low-yielding domestic government bonds.

(For a graphic on the yen and foreign asset holdings, click on: here)

RISE OF THE KIMONO TRADERS

An explosion in currency day-trading has been another that has made ripples in Tokyo's exchange market and typifies Japan's infatuation with all things foreign.

Advertising for online margin trading brokerages dot Tokyo's subway lines, offering tight spreads and leverage that sometimes allows traders to boost bets by 100 times and more.

A survey among Tokyo's top banks and brokers showed a 56 percent jump in trading in minor currencies to a daily average of $29.1 billion in the year to April.

The rising volumes mean professional FX traders track the trends of the individual traders, dubbed "Mrs. Watanabe" or the kimono traders because of the trade's popularity with women.

The appetite of Japan's individual traders for the sliding New Zealand dollar has worried the professionals because the kiwi is not as widely traded as other currencies, and thus moves can sometimes be very sharp.

The kiwi <NZD=D4> has been hit by expectations of interest rate cuts from their steep levels of 8 percent as the economy appears to have fallen into a recession for the first time in a decade.

On the Tokyo Financial Exchange (TFX), one of the main intermediaries in the margin trading market, long New Zealand dollar positions have roughly doubled in less than two weeks to a record high as of last Friday. Long positions in the kiwi and the Aussie make up about 80 percent of all long positions on the TFX.

"That's a bit scary, quite scary really," said Gerrard Katz, head of North Asia FX trading at Standard Chartered in Hong Kong.

JPMorgan Chase estimates that the day-traders' long position in foreign currencies totals nearly $50 billion.

But Junya Tanase, a strategist at JPMorgan in Tokyo, says that anecdotal reports suggest the traders have become less leveraged than a year ago when their forced selling added fuel to a plunge in the kiwi and Aussie <AUD=D4>.

Tanase said the traders could probably withstand a drop in the kiwi to near 70 yen. The kiwi was near 78.50 yen <NZDJPY=R> on Wednesday.

Analysts also believe traders who got burned last year have learned their lessons.

"They can tolerate a much larger decline," Tanase said.

[HenryTo]

Japan thinking hard about its immigration policy:
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Ageing Japan gets serious about immigration
Thu Aug 7, 2008 1:35am BST

By Isabel Reynolds

TOKYO (Reuters) - Jakarta nurse Yanti Kartina left her family in Indonesia and joined 200 other nurses moving to Japan where a rapidly growing elderly population has created a desperate need for carers in old age homes and hospitals.

The nurses, who are expected to learn Japanese and requalify as they work, are seen as an important test case as Japan struggles with the world's fastest growing elderly population and a workforce that is forecast to shrink, potentially devastating the economy.

"Japan is the first developed country to face this kind of population crisis," said Hidenori Sakanaka, a former immigration bureau chief in the capital of Tokyo who now heads a think tank.

With more than a quarter of Japanese expected to be aged over 65 by 2015, the country faces serious economic consequences, including labour shortages that could weigh on GDP.

A group of ruling party politicians see immigration as a possible solution and have presented Prime Minister Yasuo Fukuda with a radical new proposal that seeks to have immigrants make up 10 percent of the population in 50 years' time. Government figures show the workforce is on course to shrink by eight million in the next 10 years.

If the necessary laws are passed, mass immigration could transform a country once so wary of foreigners that it excluded them almost entirely for more than 200 years until the 19th century.

"I don't think there is any way forward but to accept immigrants," Sakanaka said.

Even now, the idea of allowing in more foreigners is often described as a risk to Japan's relatively crime-free and homogeneous society.

Many landlords refuse to rent apartments to foreigners and few Japanese employers offer immigrant workers the same rights as their Japanese colleagues. Less than two percent of Japan's almost 128 million population are currently foreign-born.

Tetsufumi Yamakawa, chief economist at Goldman Sachs in Tokyo, believes immigration, combined with efforts to draw more women and elderly people into the labour market, could lift growth above the annual one percent or less forecast by many analysts.

"I think this is very good timing to start thinking about this," he said. "The decline is already in sight."

The Indonesian nurses, who have been recruited to work in short-staffed hospitals and old peoples' homes, are the latest wave of controlled immigration. Government officials hope they will face fewer problems than their predecessors.

FAILURE TO FIT IN

More than 300,000 immigrant Brazilians of Japanese descent, have been a boon for Japan's automotive and electronics factories, where many of them work. They have also boosted the Brazilian economy, remitting $2.2 billion dollars home in 2005 alone, according to the Inter-American Development Bank.

But in many ways, the Brazilians have failed to fit in even though they are the descendants of Japanese who left rural areas to start afresh in Latin America, mostly in the early 20th century.

Believing their heritage would give them an advantage in blending in, the Japanese government loosened conditions for working visas for them in 1990. The move was not entirely successful.

The Brazilians complain of discrimination and lack of schooling for their children, many of whom speak only Portuguese, while their Japanese neighbours are often shocked by their late-night parties and failure to conform to rules such as trash recycling.

"They were just brought in and nothing was done to help them in terms of welfare afterwards," said ruling Liberal Democratic Party (LDP) lawmaker Hirohiko Nakamura, a member of the committee that produced the new immigration report.

"Then people blame the foreigners for the problems, even though it's Japan that invited them here and didn't do anything for them," he added.

The worst case, he says, are the tens of thousands of mostly Chinese workers allowed in on temporary "trainee" visas that allow them to work in menial jobs on farms and in factories.

That system has kept some small regional businesses ticking over, but reports of abuses such as extremely low pay, sexual harassment and confiscated passports abound.

HIGH HURDLES

Many say that despite the desperate need for workers, Japan is setting hurdles too high for the latest batch of immigrants.

The Indonesian nurses and care workers will have only six months of Japanese study before starting full-time work. They must pass the relevant national examinations within three or four years while working as assistants, or be forced to return home.

Lawmaker Nakamura is optimistic about their chances, citing the example of some of the country's highest profile immigrants.

"Look at the Mongolian sumo wrestlers! They speak Japanese really well," he said.

But former immigration bureau chief Sakanaka worries that the Indonesian nursing programme would end in failure because of the complexity of the Japanese language and because he thinks the rules have been made too strict.

"I think the system will turn out to be an embarrassment," he said. "Almost nobody will pass and they will be told to go home."

He advocates inviting in younger foreigners and allowing them to complete their training in Japanese before starting work.

On a broader basis, he and others say, opposition to immigration in Japan is less wide-spread than allegations of discrimination and exclusion would suggest.

"Certainly it is going to take time for Japan to be more accepting," said Yamakawa of Goldman Sachs.

"But I do not believe in the superficial argument that Japan has had a homogeneous population for so long that it cannot accept anyone from outside."

[HenryTo]

Kuwait Investment Authority looking to significiantly increase its stake in Japan:

http://www.ft.com/cms/s/0/fbcd21a2-6187-11dd-af94-000077b07658.html

[rffrydr]

Tagged as "subprime" Nomura's surprise writedown shows how much past that we are. 888million invested into Fortress written down...lucky?

http://www.ft.com/cms/s/0/643b259e-5d47-11dd-8129-000077b07658.html
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Private equity funds getting into real estate lending in Japan as domestic lending for real estate slows:
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Loan Star to launch real estate financing in Japan
Wed Jul 23, 2008 6:59am BST

By Junko Fujita

TOKYO, July 23 (Reuters) - U.S. private equity firm Lone Star [LS.UL] will start extending loans for real estate deals in Japan, eyeing a rush of property to be put on the block by developers keen to raise funds, sources familiar with the matter said.

Lone Star, which has already established itself in the Japanese real estate market by buying golf courses, hotels and financial institutions, has now decided to branch out to provide mezzanine loans to property buyers, three sources told Reuters.

Lone Star will offer loans through a company called Star Finance Co Ltd, said the sources, who asked not to be identified because the fund has not yet publicly announced its plans for the new business.

Japanese megabanks such as Mizuho Financial Group Inc (8411.T: Quote, Profile, Research) and Mitsubishi UFJ Financial Group Inc (8306.T: Quote, Profile, Research), as well as overseas banks such as Citigroup Inc (C.N: Quote, Profile, Research) and Merrill Lynch and Co (MER.N: Quote, Profile, Research), are cutting their exposure to senior loans after being hit by the subprime loan crisis.

That is helping boost demand for mezzanine or junior loans, which are considered riskier but fetch higher interest payments than senior loans.

Lone Star hired Michael Griffin, a former real estate securitisation banker at Morgan Stanley (MS.N: Quote, Profile, Research) in Japan, to lead the fund's effort to find deals to finance, said the sources.

Overseas investors are raising funds to invest in Japan's real estate market, sensing an opportunity to buy assets cheaply with sector share prices sliding and developers looking to offload assets to stay afloat.

Last month MGPA, a private equity real estate investment firm that is half owned by Australia's Macquarie Group (MQG.AX: Quote, Profile, Research), said it planned to raise a new Japan fund worth more than $1 billion.

ING Real Estate also said last month it would launch a fund for Japan later this year. [ID:nSP48870]

Richard Price, the firm's Asia head, said the best investment opportunities in Asia would be in Japan, where rising borrowing rates and a cut in bank lending for property could persuade some owners to sell.

A handful of mid-sized Japanese real estate companies have in fact folded in the past few months, with apartment developers among the hardest hit by sluggish demand for housing as the world's second-largest economy slows.

Last week developer Zephyr Co (8882.T: Quote, Profile, Research) collapsed with 94.9 billion yen ($885 million) in debt, the largest failure of a listed firm in Japan in nearly five years. That followed Suruga Corp (1880.T: Quote, Profile, Research), a real estate firm that last month defaulted on its debt.

Companies keen to avoid the same fate have been rushing to shore up their finances by selling assets.

Pacific Holdings Inc (8902.T: Quote, Profile, Research), for example, has unveiled plans to nearly halve its assets in the next few months, and has reached out to Daiwa Securities Group Inc (8601.T: Quote, Profile, Research) for a possible capital injection.

[rffrydr]

Yes, I'd agree: the whole world is going to have to turn a little japanese. To say they are obsesses with energy effiency is an understatment. And this will benefit many japanese companies directly. And the old enemy and understudy, the Chinese, will be drawn especially close.

But as far a triggering the consumer to reach for the mattress money.... For them the deflation in that kind of inflation will be obvious.

The turn, when it comes, will have to come from the West I'm thinking.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

At the same time, the subprime crisis "exposed" the strength of its banking system. Never mind that it was only brought about after years of write-downs and recapitalizations. Also, real estate prices in the major cities are now up and have been rising on a year-over-year basis since 2006 - first time it had in 16 years at that point.

Nikkei finally reversed course.