Bystander’s View on Japan #9, July 31, 2012

I am sorry to be late in updating Bystander’s View. Completely forgot. From KL, today!



Heat Waves. 

1.    WeatherYesterday, Japanese archipelago experienced very hot weather. 74 points of 927 weather-stations spread out throughout Japan recorded higher than 35 degree Celsius.More than 1300 people were hospitalized because of “heat collapse.” This heat wave will continue another week.If you talk about heat wave of weather, Japan is not the exception. U.S. and Australia are experiencing similar heat wave which brings draught. This time, we have to pay attention to Commodities as Jim Rogers is always crying wolf. 

2.    PoliticsAnti-nuclear-power-plant movement has risen in Japan. Yesterday, a massive demonstration was held surrounding parliament house. Number of participants was estimated to be 20,000Although there were no violence involved, anti-nuke sentiment will be easily developed into anti-government and anti-big businesses.

We have to watch this citizen-based-movement will further lead to “Spring of Japan.”



                     July 27      %Change

    NIKKEI     8566.64      -1.19

    TOPIX       726.44       -1.00 

TSE has been having very thin trade volume for several weeks. Hot summer has come, but market is cooling. Many Japanese blue-chips records historically low stock prices.

One example is Oji Paper (3861). The company is expected to record double digit profit increase. But still, PER is 9. PBR is 0.6 and Dividend yield is 4%. The stock price is 248 which is historically low. There is some political risk emerged on Oji in China, which needs to be paid attention, but the level of stock price is very very low.

Fuji Film, JFE, Asahi Glass and TDK are in the similar situation. When everybody is Risk-off, this may be a great opportunity to skillful fund managers.


Generally speaking, sentiment is better on Japanese economy. Thanks to hot weather, summer sale has been good. People may spend more during summer holidays. 

Although China slowdown may be the risk factor, Japanese economic performance must be better than other developed economies.

Comparing to Taiwan and Korea, Japan will less vulnerable to the European and American recessionary situation. 


Now, the ruling DPJ was split because a group led by Mr. Ozawa said SAYONARA to PM Noda. Ozawa decides his party name, Kokumin no kurashiga ichiban. It literally means “People’s Livelihoods First,” which is regarded as joke by many Japanese voters.

Political situation becomes very fluid. Japan does not have time to waste in playing musical chairs. Only solution will be a general election to decide undecided issues.  

Popularity of DPJ dropped to 18%, while PM Noda’s approval ratio dropped to 28%Many political analysts are saying the general election is inevitable in September 2012.