JBIC– Japan Bank for International Cooperation
JBIC– Japan Bank for International Cooperation
Foreword: Chris K (A S’porean FT living in Japan) commented on Facebook on this piece. I’ve worked his comments into the original piece and added some background info. Hence this retitled piece which is an expanded and reworked version of the earlier piece.
Prime Minister Abe … in his latest op-ed in the WSJ says that if developed countries are facing a future of low or no growth, and shrinking populations, then perhaps governments should focus on improving living standards and not simply chase high economic growth rates.
Well as S’pore is now facing a future of low growth and a shrinking population, unless FTs are let in by the cattle-truck load, the PAP administration should focus on improving living standards and not simply chase high economic growth rates?
But then the PAP can’t let in its beloved FTs to eat S’porans’ breakfast, lunch and dinner and all snacks in between. FTs are needed to spur S’poreans to be as cheap to hire as FTs are, despite the higher cost of housing etc here. Hard Truths are more important than the well-being of S’poreans?
Here’s what Chris K says about life in a stagnant, past its prime Japan
Lived in Japan 1990-1995 and then again from 2006, the difference between the 2 periods in my view is that it is more livable today than before despite all the “bad news” of stagnation and deflation. Working hours have steadily declined despite shortage of labour. Total Fertility Rate has gone up.
(Btw, a few yrs ago I reported that HSBC showed that Japan was doing pretty well)
Life can be good in a country with a shrinking population and deflation. The PAP juz doesn’t like stagnation, deflation and a shrinking population.
Chris K then goes on to criticise the PAP’s administration policies here. Pay attention to (and think hard about) the section beginning the entire pension and healthcare proposition have under LHL been tied to ever-increasing real estate prices …
But I completely agree with Cynical Investor, the PM won’t be heeding Abe’s advice. Why? Just 2 simple things.
First the government salaries are marked to GDP growth despite the factthat in today’s digital economy GDP is a terrible measure of progress since many improvements and convenience in life comes free (think on-line shopping vs going to shops) or below cost, thus understating the impact on GDP growth. So nuts and bolts, brick and mortar still rule their head even if they have to accept the digital challenge.
Harry and Dr Goh has things easy when running S’pore. They grew the economy and jobs and wage rises followed.
Nowadays GDP is decoupled from jobs and wages. I wish someone would do a similar chart for S’pore.
Second, far more importantly, the entire pension and healthcare proposition have under LHL been tied to ever-increasing real estate prices (think downgrades and LBS to finance you and your parent’s healthcare and pensions). That means forget about quality of GDP growth, quantity is the game where large increases in population are required not just for those nuts and bolts, brick and mortar but with the benefit of keeping real estate prices elevated.
If you think we have a real estate bubble that may or may not be deflating, then equally we then must have a bubble in the government’s projections for our retirement and healthcare. Both are inexorably linked, one cannot exist without the other because of the use of CPF for housing. So 6.9m is a done deal, 10m a very likely eventual outcome. More foreign labour supply to hold down wages, a more crowded country, more stresses and greater wealth disparity. At some point this will stop and then this country will have an almighty day of reckoning.
Neither is M’sia or SE Asia. It’s Northern Asia. I blogged yonks ago that we are part of the Microsoft ecosystem.
LMIR Trust to acquire Jakarta mall for 3.6 trillion rupiah
Lippo Malls Indonesia Retail Trust (LMIR Trust) plans to bulk up its portfolio by acquiring a five-storey shopping centre in southern Jakarta, Indonesia, for 3.6 trillion rupiah (S$385.7 million) which it plans to pay with cash and new units.
The acquisition of Lippo Mall Kemang (LMK) from PT Almaron Perkasa – a company incorporated in Indonesia which is 92 per cent indirectly owned by the trust’s sponsor PT Lippo Karawaci – could potentially raise the trust’s portfolio by 27 per cent from S$1.42 billion as at end-June to S$1.8 billion.
LMIR Trust’s manager, LMIRT Management, has proposed to issue up to 301.37 million new units to PT Almaron Perkasa, which under the conditional sale and purchase agreement signed on Sept 14 will receive 3.18 trillion rupiah in cash and 420 billion rupiah in units for LMK.
The firm deemed the deal to buy LMK, which enjoyed a high occupancy rate of 93 per cent as at June this year, a “strategic acquisition of a prominent retail mall” located close to residential apartments, a hotel, a wedding chapel, a school and a country club. LMK also serves as the podium of the proposed JW Marriott Hotel, Pelita Harapan school campus, a planned hospital and three condominium towers. (BT this week)
From now till end-March 2017, acquisition strategies will be executed in full swing by Accordia Golf Trust (AGT).
The first Singapore-listed business trust with golf course assets in Japan, and also Asia’s first golf trust, AGT currently manages 89 golf courses in Japan, with a combined value of about 160 billion yen (S$1.89 billion).
Together with its sponsor company, Tokyo-listed Accordia Golf, they own 133 golf courses in Japan, and they are the largest golf operator in Japan, with a 5.5 per cent share of the market.
In a media briefing on Monday, chief executive officer Yoshihiko Machida said the trust is now poised to acquire an additional 50 billion yen worth of golf assets, with a preference for 19 golf courses currently owned by Accordia Golf, of which AGT has the first call options right to purchase. (BT this week)
I own a bit of the former and and still thinking of the latter. The issue with these is the strong S$. (Yen was at an all time low against S$ this week).
Number of foreign visitors received in 2013
I’m surprised that Indonesia has only 8.8m visitors given the popularity of Bali.
Still Mynamar is the place to invest in the tourism biz. Opportunities there from recent BBC article.
Something for the parents: packets of secretly punctured condoms.
BTW, Jap economists say immigration is the only way to tackle Japan’s old age problem.
Update at 6.20am: How parenting has changed in half a century in the US. Do watch this info-grahpic
By 2050, elderly (65 and over) almost 40% of population
Next to Japan only. But no robots here, only FTs.
Japs smarter than us in avoiding the problems that FTs bring, like pushy Pinoys, wanting to change PM from Prime Minister to Pinoy Minister and SPF to S’pore Pinoy Force. But then they have friends like William wan, Kirsten Han, AWARE and Maruah. Their only public opposition is Gilbert Goh and Goh Meng Seng.
The govt should remember that when the Pinoys burnt our flag in the 1990s and it protested, the Pinoy govt gave the S’pore govt the finger, telling it nothing wrong with burning our flag.
Given that a senior cabinet minister and NTUC chief, and a jnr minister from NTUC is giving the PAP govt a bad name, maybe it’s time to remind S’poreans that the PAP govt is not all full of NTUC clowns. On Tueday I reported that Khaw and MoM Tan had the developers concerned, and today I’ll remind S’poreans that PM’s economic team (headed by Tharman) are keeping int’l investors onside (too bad about TOC, TRe readers, but then they can take comfort that locals like me too like a strong S$.)
(4 Feb) – Recent alarmist commentary may have stirred up concerns about Singapore’s economy, but in the midst of the emerging market rout, safe-haven seekers’ faith appeared unshaken as they scooped up its currency.
“We have noted its safe-haven status within the Asian region is getting stronger in past years. So when you have a broad risk off, in general the Singapore dollar will outperform,” said Ju Wang, senior foreign-exchange strategist at HSBC.
Earlier this week, global markets largely sold off, but the Singapore dollar strengthened, with the U.S. dollar fetching as little as 1.2666 on Tuesday, compared with around 1.2790 Friday. Against the currency of its neighbor Malaysia, the Singapore dollar has touched its highest level since 1998.
But To be sure, it isn’t clear the Sing’s climb is sustainable or would withstand a more extended market rout.
“When people want to take money off the table, the safe-haven tag may not be helpful,” Song said. “We can’t avoid spillover from contagion in Southeast Asia.”
Now that would have TOC, TRE readers happy, ’cause they can blame it on the govt.
BTW, here’s an interesting article on the flows in and out of Indonesia and the other Fragile Five. http://www.economist.com/blogs/buttonwood/2014/02/emerging-markets. Actually the rupiah has done relatively better than most other emerging markets currencies against the US$. So has the the Thai baht despite the political problems.
But the currencies of Thailand Indonesia, M’sia and the Philippines have fared worse against Japan’s yen than they have against the US dollar. This means that Japanese financial ,institutions may slow down their investments in the region: investing here could be like catching a falling knife. So, they’ll likely wait.
When the BOJ under governor Haruhiko Kuroda launched its monetary base-doubling quantitative and and qualitative easing (QQE) policy in April, there were strong expectations that a “tsunami” of Japanese funds would rush into Southeast Asia in search of higher yields.
So far, that has not happened even though Japanese institutional and individual investors are said to be eager to increase their exposure to Southeast Asian markets. A principal reason for their hesitancy, officials say, is Japanese investors’ fear of being exposed to exchange rate risk.
As a result, there is “intense discussion going on now between Japanese and Asean officials on ways to improve and enlarge the (currency) hedging markets” in Asean, according to Iwan Aziz, head of the Office of Regional Economic Integration at the Manila-based Asian Development Bank (ADB).– BT report last week
Well can tan kuku for an agreement. Asean officials more noted for talking cock than doing something, anything.
And anyway, this region will not be flavour of the month early next yr. The West is. Don’t count on a wall of Jap money.
Gd summary from FT on Japan’s reemergence in region
China’s slowdown and the prospect of less easy US money have sent a chill through southeast Asia. Benchmark indices in Jakarta, Bangkok and Manila have lost almost half of the one-fifth gains they had made this year to mid-May. The real economy is weakening, too. Last week the Bank of Thailand cut its growth forecast below 5 per cent and recent comments from Bank Indonesia suggest it accepts growth will slip below 6 per cent. Hardly a disaster then, but nor is it what these countries or their followers are used to. Enter Japan and, crucially, its direct investment. In terms of trading with the region, Japan’s significance has slipped over the past decade as its economy stagnated, but at a shade over $200bn it commands the same share as China. Its FDI of $60bn into the region over that period, however, is 10-times greater than its giant neighbour, according to HSBC. Japan is either the largest or second-largest investor in each country.
During the past two months, Japanese banks and insurers have spent almost $6bn buying stakes in their southeast Asian counterparts. More deals are expected as they try to escape a weak and ageing home market.
Meiji Yasuda Life Insurance Co is expected to acquire a 15% stake in Thai Life Insurance Co. in what would be one of the biggest investments ever in Asia by a Japanese life insurer With the planned investment worth about ¥70 bn (US%700bn), Meiji Yasuda wants to make the major Thai insurer into an equity-method affiliate and dispatch executives, the sources said.
Like other Japanese insurers, Meiji Yasuda is looking to expand overseas earnings, especially in Asia, amid sluggish business at home due to the aging of society.
Sumitomo Life Insurance Co. has made a ¥28 bn investment in Vietnam’s top insurance group, while Dai-ichi Life Insurance Co. in June announced a ¥34.3 bn investment in Indonesia. Sumitimo which lost out to Yasuda is now looking to Indonesia where Bank Negara is looking to sell up to 40% of its life business for up to $800m, according to the FT.
Japanese banks have been active too. https://atans1.wordpress.com/?s=Mitsubishi
Low labour costs and Cambodia’s proximity to key markets such as China and other emerging economies in South East Asia are attractive to foreign investors.
And with wages in countries such as Thailand and China on the rise, Cambodia is likely to become even more attractive.
Vietnam R private equity
— 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?
No ASEAN round-up this hols week.
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.
“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$.
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.
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.
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.
Critical parts of iPhones, iPAds and iPad2s made in the area where the earthquake and tidal wave struck.
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.
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.
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.
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,
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.
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.