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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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| Posted: Fri Jan 04, 2008 9:09 am Post subject: |
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I wonder what these guys thought of last night's trade? Nikkei down 5%.
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rffrydr
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rffrydr
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| Posted: Thu Jan 03, 2008 8:19 pm Post subject: |
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...It certainly is: this little peice of irony should not go unnoticed:
| Quote: | Basically the problem facing Japan is that the up-tick in inflation is taking place at precisely the same moment as there is a downtick in several other key economic indiactors. What this means basically is that Japan is getting squeezed on both fronts. (...) The last time inflation showed signs of life in this way, Japan was pushed straight off into recession. History may well be about to repeat itself yet one more time here. But the real question is when will people actually start to learn some of the costly lessons experience is offering us?
In other words, what we are seeing are not demand-pull inflation which would have been the hallmark sign of a recovery driven by domestic demand but rather cost-push inflation which is being imported through high energy and base commodity prices; remember all that flurry of the rising price on mayonnaise, Starbucks lattés as well as recently wholesale prices which would rear their head in the PPI indice(s). On the general situation and as per usual, Morgan Stanley's Takehiro Sato also remains calmly on top of the situation in his recent note Inflation Irony where the bottom line is the following and I cannot but agree. |
So many, for so long have this concept chisled into their conception of a recovery. That is there would be none without it. Sweet Irony! my favorite indicator.
http://clausvistesen.squarespace.com/
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rffrydr
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| Posted: Thu Dec 27, 2007 8:43 pm Post subject: |
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2007 "The Year of Deception"
http://www.ft.com/cms/s/0/d4aab208-b4a6-11dc-990a-0000779fd2ac.html
A stealth economy meets an invisible investor.
You can underline this part:
| Quote: | | Foreigners have turned aggressive net sellers since the summer partly because of irritation at the failure of activist funds to wring changes from management. |
Currently "hot" steelmakers are busily exchanging one another's shares to fend off global "consolidation."
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HenryTo
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| Posted: Sun Dec 16, 2007 12:36 pm Post subject: |
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The raising of capital expenditures is, contrary to popular belief, not a bright spot. While this may help the local investment spending numbers (thus increasing GDP), this will help cannablize profit margins that are already low in Japan - not to mention the profit margins of other countries that compete with Japan, such as China and Korea.
Japanese companies need to cut the slack in corporate governance and its labor force. Having a ROE of just over 10% (when the Euro Zone is at 15% and the US at 20%) is totally unacceptable - unless Japan has no plans to join the 21st century as a financial superpower. |
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rffrydr
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| Posted: Sun Dec 16, 2007 7:21 am Post subject: |
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Tankan depresses with cost of crude most heavy (which'll turn a rising yen into a welcome yen evetually). When the "ex-Japan" market wakes up and realizes that Japan IS asia you'd expect the EEM to come off a little more.
| Quote: | Japanese economy
Published: December 14 2007 09:07 | Last updated: December 14 2007 19:43
The big surprise from Friday’s downbeat survey on Japanese business sentiment is that it nudged share prices lower. Sure, the Bank of Japan’s widely followed Tankan survey showed big manufacturers’ sentiment at a two-year low – but how could it have been otherwise?
Data from the world’s second biggest economy have turned relentlessly bleak. Last week estimates of growth for the third quarter were revised down to an annualised 1.5 per cent compared with initial estimates of 2.6 per cent. A few days later a government survey revealed that consumer confidence had reached a four-year low in the month of November.
The recently completed reporting season showed a deceleration in earnings growth and that the stock market, down 10 per cent this year in local currency terms, has lagged behind global peers. Add in a likely US slowdown and a bout of yen appreciation, and it is hard to see what Japanese manufacturers have to smile about.
The pressing question is how bad things can get. There are some one-off factors depressing growth, including more stringent new building regulations, but the basic mood is one of caution. Companies themselves are looking for a modest 1.1 per cent rise in recurring profits this year, according to the Tankan.
Higher prices for oil and other raw materials suggest margins will continue to contract, particularly since companies struggle to pass on increases in input costs. Alone of the big industrialised countries, the price of Japan’s exports to the US fell in the year to November, according to US data.
Are there any bright spots? Optimists can take heart from the plans for bigger spending. Large companies plan to raise capital expenditure this fiscal year, although this tends to be an unreliable part of the survey and spending plans will be swiftly whittled back if demand cools. Oh, and money should remain cheap. The chances of the BoJ being able to raise rates this fiscal year look slim. |
[/quote]
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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.)
...
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.
...
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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