カテゴリー: Message from Tokyo

TOPICS OF THE WEEK: SE Asian Players: No More Junior Varsity                   On August 14’s issue of Wall Street Journal, there was a big article on SE Asian companies’ activities on international M&A. The report mentions and listed the top 10 cross-border M&A acquisition by SE Asian companies in 2011 and 2012. 

DBS’s (Singapore) acquisition of PT Bank Danamon Indonesia for $7,340 million was ranked first.   Petronas’s (Malaysia) acquisition of Progress Energy Resourcing (Canada) for $5,714 million was ranked secondThere is a large picture of Battersea Power Station, which was used by Pink Floyd album cover, stating that SP Setia and Sime Darby bought the land for $620 million for a real estate development. 

                  Increased cash generated by higher growth in the home countries, it is natural for SE Asian giants to expand outside the region through M&A. It is, however,  relatively easy to buy a company and/or assets. The real task is to integrate and value add after the merger/purchase. The management capability will be the essence of success, and we have to watch the outcomes of those acquisition carefully. MARKETS

                     August 17    %Change

    NIKKEI     9162.50   +3.04

    TOPIX       765.81      +2.54 

TSE has been increased because of overseas-investors’ money inflow. The market is supported by the sentiment, not by the improved corporate performance. ECONOMY

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

 POLITICS

The laws to increase the sales tax passed parliament two weeks ago. Last week was a off-week for political battle. But the end of summer will likely to be the end of Noda administartion. Noda is reported to give  promise to Tanigaki, the opposition party leader, to dissolve the diet and have the general election.

Many political analysts are saying the general election is inevitable in September 2012.

END

 

  

TOPICS OF THE WEEK 

ROE: Back to Basics

This week is a OBON week in Japan when most of the factories and offices take a summer break.

Stock trading will be quite light. So, taking this opportunity, I would like to analyze Japanese stocks according to ROE.

 Recent issue of NIKKEI Veritus has risted up their top picks by screening, the stocks which have higher Yen 200 billion market capitalization, and which have higher expected ROE comparing past 5-year average and also previous year.

 Top 10 stocks are as follows.

               Company        (Code)   Expected ROE%

        1.    Oracle Japan  (4716)       46.2

        2.    Daito Trust      (1878)       32.3

        3.    M3                   (2413)       31.3

        4.    Marubeni         (8002)       23.5

        5.    Rakuten          (4756)       21.9

        6.    Nitori               (9843)       21.5

        7.    Daihatsu         (7262)       16.3

        8.    Sumitomo Rubber (5110) 16.2

        9.    Lawson          (2651)       15.8

      10.    NIDEC           (6594)       15.4

 The performace of those companies, during March 2009 and now, are more than 50% better than TOPIX, according to NIKKEI Veritus.

Back to basics will work when market direction is hard to read. 

 

MARKETS

                     August 10       %Change

    NIKKEI     8891.44      +3.93

    TOPIX       746.79       +3.15 

TSE has been increased because too much pesimisims is gone past few weeks, but the trading volume has been thin for several weeks. As this is a typical summer holiday week in Japan, trade will be thinner.

 

ECONOMY

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

 

POLITICS

The laws to increase the sales tax passed parliament last week. This week will be a off-week for political battle.

But the end of summer will likely to be the end of Noda administartion.

Noda might have promissed to Tanigaki, the opposition party leader, to dissolve the diet and have the general election.

Many political analysts are saying the general election is inevitable in September 2012.

END

TOPICS OF THE WEEK 

THINKING OF IMMIGRATION BY LOOKING AT OLYMPICSJapanese women finished 16^th, 19^th and 76^th in Women’s Marathon in London Olympics.Remembering Japanese woman won gold medal in Sydney and Athens, this drop is disappointing. They are behind today’s high speed race led by Kenyans and Ethiopians. 

The winner of yesterdays race was Ms. Gelana, an Ethiopian.One thing I was surprised to know about her is that she was trained by Japanese company-sponsored team for a while in Japan.Actually, the gold medalist at Men’s Marathon in Peking Olympics, Mr. Wanjiru, a Kenyan, was traind in Japan from high school to a company-sponsored team. He can command good Japanese, and popular in Japan. He seems to be liking to live in Japan. 

In the London Olympics, we can see many Africans and Chinese who moved his/her nationality to other countries to compete in the games. Japanese team is organized by only pure Japanese now. If Wanjiru and Gelana were in Japanese team, Japan could have won two more gold medals.Japan’s population is decreasing, and that is said to be the major reason of declining Japan’s power in the world.We should relax immigration policy drastically, and should accept immigrants who are willing to live in Japan.  Japan should give green cards to the students from overseas who wish to stay and work in Japan. 

Having said this, I now come to the point that Japan is not open even accepting short term visitors. Japan should relax in its visa policy. Japan should abandon requiring visas from tourists from ASEAN countries as a first step.

MARKETS

                     August 3      %Change

    NIKKEI     8555.11        -0.13

    TOPIX       723.94        -0.34

 

TSE has been having very thin trade volume for several weeks. Hot summer has come, but market is cooling. Some large companies have announced fiscal results worse than market expectation. Sharp, SONY, Mitsubishi Chemical, Sumitomo Corp. Shiseido, Komatsu and Honda are such examples. Few companies have announced better results than expectation. TDK, Panasonic and Softbank are such examples. 

ECONOMY

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.

 POLITICS

Now, political scene becomes very serious. Opponent LDP is threatening governing DPJ by showing the possibility that they will submit no-co9nfidence motion on PM Noda. This will likely to be approved if all opponents to DPJ get united.

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.

End 

 

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

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TOPICS OF THE WEEK 

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.”

 

MARKETS

                     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.

ECONOMY

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. 

POLITICS

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.

 

TOPICS OF THE WEEK 

Malaysia is picked up as one of the BEST TARGET COUNTRIES for securities investment. 

Nikkei Veritas weekly magazine picked up promising investment target countries to Japanese institutional and retail investors.Malaysia is ranked 10^th. The top ten countries are              Ranked 1^st          China              2^nd                       Peru, Kuwait              4^th                        Nigeria              5^th                        Chile, Indonesia, Khuzestan              8^th                        Philippines, Korea              10^th                      MALAYSIA, Columbia, India, Russia, Egypt 

The article ranked countries buy using 5 yardsticks. Giving points from 5 (Top) to 1 (bottom).Yardsticks and Comparison of Malaysia with China, Indonesia, are as follows.                                                        Malaysia              China     IndonesiaGrowth Potential,                 3                       5            4Stability                                5                       5            3Fiscal Soundness,              1                       4            4Economic Autonomy,          1                       5            4Business Environment         5                       2            2 

One particularly good thing about Malaysia is that the country offers the lowest risk while it  gives good returns. 

MARKETS                     July 20      %Change    NIKKEI      8669.87      -0.62    TOPIX         733.82      -1.67 

TSE has been having very thin trade volume for several weeks. Hot summer has come, but market is cooling. 

. ECONOMYGenerally speaking, sentiment is better on Japanese economy. People may spend more during summer holidays. The year’s recruitment of newly grads from universities will be improved, according to Nikkei Newspaper.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. POLITICSNow, 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.

Many political analysts are saying the general election is inevitable in September 2012.

Over