Jappo banks step up presence in ASEAN region

This week:

– Mitsubishi UFJ (MUFJ), Japan’s biggest bank, bought a 20%  stake worth US$743m  in state-owned VietinBank, the largest-ever merger or acquisition deal in Vietnam’s banking sector. The deal aims to boost “support for Japanese companies operating in Vietnam”, Bank of Tokyo-Mitsubishi UFJ president Nobuyuki Hirano said, and to tap South-east Asian markets; after seeing its profits tumble this year, like other Jappo banks.

The Japanese bank last month reported profit in the six months to September dived 58 per cent year on year to US$3.6 billion, due partly to declines in stock holdings.

VietinBank, or Vietnam Joint Stock Commercial Bank for Industry and Trade, said State Bank of Vietnam will still own the majority of its shares. For the record, it is Vietnam’s second largest bank by asseys.

– SMFG said it plans to expand its consumer finance business to target the growing middle classes in South-east Asia.

The new Greater East Asia Co-Prosperity Sphere?

BANZAI!

No ASEAN round-up this hols week.

Jap stocks cont’d trading below book value

On Wednesday last week ”the broad Topix index closed at 0.89 times book value, a whisker away from its widest discount to the MSCI World for five years, and near its lowest level relative to the S&P 500 for almost eight years,” reported the FT.

 

What is cheap can stay cheap. But do remember that in the 1950s and 1960s, a few ang mohs bot Jap stocks because they were very cheap by Western standards. They became investment legends.

Saizen Reit

 This article (“Residential properties have been the most popular among investors based on its stable return,” said Ishinabe. “Since last year, investors have expanded their interest into other types of properties such as office buildings and commercial facilities.”) on two bulls in Jap commercial property despite supply a’coming reminded me of u’m post on Saizen Reit that tot me the basics of this residental property Jap Reit. 

http://singaporeanstocksinvestor.blogspot.com/2012/05/saizen-reit-to-buy-or-not-to-buy.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ASingaporeanStockmarketInvestorassi+%28A+Singaporean+Stockmarket+Investor+%28ASSI%29%29

 

Buy yen: pros & cons

“The idea that the yen is a safe haven is about the most unsafe safe haven I’ve ever heard of. This is a country whose fiscal arithmetic makes Greece look like Switzerland,” independent strategist David Roche told CNBC.

But Eisuke Sakakibara, Japan’s former vice finance minister, also known as “Mr. Yen” said that while it was true that Japan’s government debt was 180% of gross domestic product, its household financial assets were about 240 percent of GDP.

“We will not have a financial crisis for another four-five years”.

While many “experts” say the market was likely to try to push the yen higher to test the Japanese authorities’ willingness to intervene, as the Swiss central bank did when it believed the Swiss franc’s strength was hurting exports. But Sakakibara said Japanese exporters could survive with a yen around 80 for the dollar and 100 for the euro, and only if it appreciated in the low 70s or 60s against the dollar would it become a problem.

“I don’t think it will go down to 72, but it is likely that the yen-dollar rate will go into the 70s and probably will hover around 78, 79 for a while and that wouldn’t be a major blow to the Japanese exporting companies,” he said.

“Japan is a much bigger country than Switzerland and we cannot do what Switzerland has done,” Sakakibara said, adding that intervention was unlikely to take place at the rate of 78-79 to the dollar but only if the yen goes as high as 72.

Heck, still to S$.

French discount, Japanese premium

Renault’s market capitalisation is currently around €11.7 billion (US$16.8 billion). Nissan’s is ¥3.7 trillion (US$45.3 billion). Renault’s 43% stake in Nissan, at US$19 billion, is worth more on paper than Renault itself.

Innovative Japanese

Japan’s carmakers have agreed to close their factories on Thursdays and Fridays.  They will work over the weekend and use energy at off-peak times, helping to avoid power shortages.

Japan has lost some of its capacity to generate electricity as a result of the earthquake and tsunami on 11 March.

Wish you had friends like these?

There are reports that The Tokyo Electric Power Company, whose nuclear plant was badly damaged by the earthquake and tsunami in Japan, is negotiating for loans of as much as 2 trillion yen, or about $25 billion. Sumitomo Mitsui Financial Group, the power company’s main bank, is trying to organise the syndicated loan, and said it planned to provide “the maximum support possible.”

The FT reports that in the 1998 financial crisis when Sumitomo Mitsui was facing difficulties, Tokyo Energy (triple A rating) borrowed cheaply US$2bn from Western banks and deposited the money with Sumitomo Mitsui.

Apple and the Japanese earthquake

Critical parts of iPhones, iPAds and iPad2s made in the area where the earthquake and tidal wave struck.

Article

Why share prices of luxury brands fell

Japanese buyers make up 11% of the global luxury goods market, dominated by firms such as Hermes, Burberry, LVHM, Richemont, Tiffany and Coach. Japan’s rich and well-off would be cautious about treating themselves at a time when others are suffering.

A bull on Japan

Antidote to the doom and gloom.

The markets tend to over-react when there are natural disasters.. There is a loss of  economic activity is followed by a recovery in later quarters as reconstruction takes place. The problem here is that steady drip of bad news about the nuclear reactors.

Only after we know what happens there, can we assess the damage.

Side-effect of Japanese reconstruction

Higher US (and global) interest rates are in the offing as Japanese govt and investors sell US treasuries to raise funds for reconstruction. Remember Japan is the second largest investor in US government paper. China is the largest.

Reasoning.

If so, S’pore’s interest rates could go up. What with Mah Bow Tan building more HDB flats and plenty of private supply coming on-stream, we could be in for some interesting times. And all these before factoring-in a possibility of a US recession as interest rates rise,

“Events, dear boy, events”

This was what a British prime said when he was asked why sumething went wrong.

Applies to investing. I recently blogged that value fund managers were buying Japanese stocks because the stocks were looking undervalued.

Well with this earthquake, share prices have fallen and it will take some time to assess whether there is still value in the undervalued stocks.

Take thy good fortune, and thy bad withal;

Know for a surety each must play his game,

As from heaven’s dice-box fate’s dice chance to fall.

—

Grieve not at coming ill, you can’t defeat it,

And what far-sighted person goes to meet it?

Cheer up! bear not about a world of grief,

Your fate is fixed, and grieving will not cheat it.

Why buy Japanese? II

Hedge funds are.

Why buy Japanese?

If one is a value investor of the school that believes in buying stocks trading below book, then look East to Tokyo.

Prices are so depressed that, at the end of December, nearly two-thirds of the 1,700 companies listed on the Tokyo exchange’s main section had price-to-book ratios below 1. That means, in effect, if one of those companies was dismantled and sold off for its parts, it would fetch more than its market value.

“These stock prices are saying there’s no hope whatsoever for Japanese companies, and that’s simply not true,“ said Tony Roberts, who manages a $2 billion-dollar Japan fund for London-based Invesco Perpetual. “There are lots of great companies in Japan that add a lot of value,“ he said.

NYT article