MNCs creating new Co-prosperity Sphere

As workers earn more in China (Chinese labour costs escalate and the US of A tries to contain China, MNCs are creating new supply chains that by-pass China.

No single country offers China’s vast manufacturing base. Yet taken together, a patchwork of economies across Asia presents a formidable alternative. It stretches in a crescent from Hokkaido, in northern Japan, through South Korea, Taiwan, the Philippines, Indonesia, Singapore, Malaysia, Thailand, Vietnam, Cambodia and Bangladesh, all the way to Gujarat, in north-western India. Its members have distinct strengths, from Japan’s high skills and deep pockets to India’s low wages. On paper, this is an opportunity for a useful division of labour, with some countries making sophisticated components and others assembling them into finished gadgets.

https://www.economist.com/business/2023/02/20/global-firms-are-eyeing-asian-alternatives-to-chinese-manufacturing

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S’pore and other Asian countries that are waiting to welcome Chinese tourists

For a little red speck we are punching above our weight in getting Chinese tourists. Must be the casinos (Cambodia too)

Chinese soy sauce maker treats home market consumers as second class?

Japanese consumers are tua kee for it seems

It’s alleged that Foshan Haitian Flavouring & Food ‘s

 products sold in Japan have simpler ingredients and no preservatives. 

https://www.reuters.com/breakingviews/chinas-soy-sauce-star-suffers-premium-downgrade-2022-10-12/

Chinese netizens are not happy with the company which has 20% of the Chinese soya sauce market.

It mealy mouthy says

the accusations as a smear campaign. It says it complies with relevant food safety rules and stressed that food additives are common and don’t imply inferior quality.

https://www.reuters.com/breakingviews/chinas-soy-sauce-star-suffers-premium-downgrade-2022-10-12/

Investors are selling. It has lost about US$8 billion, or 15%, of its market value in recent days.

S’pore’s behind KL

And juz ahead of HCM City. Surprised Bangkok is so far behind. Wonder what are the criteria? Think Covid restrictions play a part. Look at HK and Tokyo.

Are we inclusive enough?

Wonder what S’pore spends on human corporate resources?

The FT reports that Japan spends only 0.1% of its corporate human resources, compared with 2.1% in the US and 1.1% in the UK.

It also reports that the Japanese PM places some of the blame on society’s inability to be more inclusive on companies’s failure to invest in their employees.

If our spend on corporate human resources is a lot closer to than of Japan than the ang mohs’, another good reason to KPKB and beat up the millionaire PAP ministers for Talking the Talk of a more equal society but not Walking the Talk.

SDP and Cheng Bock’s gang please do some research. We can only expect the Leader of the Opposition and his wankers to only wank. They can’t even be expected to even talk about the cost of living.

Cryptocurrencies in S’pore

Two interesting charts showing our level of awareness of cryptocurrencies. Good omen for the government’s attempts via MAS to make S’pore a global centre for all things crypto currencies. In Asia, China has made all activities connected to crypto currencies illegal as it prepares to launch its very own digital currency. And Japan is cautious on the issue having approved several exchanges. They ran into problems.

our central bank with several big banks is experimenting with the code underlying Ethereum. it can be used to create smart contracts.

Btw, Ethereum’s doing well

Asean currencies V US$

Indon rupiah stronger than S$. Btw, see how strong is Taiwanese dollar. Stronger than Renminbi. Grandpa Zi must be upset.

Covid-19: Int’l media is racist

As are our ang moh tua kees. Think Tan Jee Say: praising NZ’s PM for what she did in containing the pandemic, while ignoring Asian countries which did better. Of course he was dissing our PAP govt, which to be fair hasn’t done a great job, only a good job. It lets too many mamas in: Covid-19: FTs from India reinfecting S’pore

That are my conclusions after seeing this (from ang moh FT which with Economist gives fair coverage)

The int’l media in general, and the ang moh tua kees praise here praise NZ and its PM. It’s done good things but it’s two islands in the middle of the Pacific Ocean.

Praise Vietnam, China, Korea Indonesia and Japan. FT and Economist do this btw in their coverage.

Bringing robot technology to Japan

This sounds like “Carrying coal to Newcastle” as the saying goes.  This saying was already well known in the mid-1500s, when Newcastle-upon-Tyne in England had been a major coal-mining center for 400 years.

But it’s real happening. Ocado, is the UK food delivery service that has transformed itself into a provider of automated warehouses for retail chains, is to build the online business of Aeon, Japan’s largest supermarket operator.

Orcado is already this for major supermarket chains in the UK, US and France.

Japan helps Africans to fight “Chinese debt trap”

Japan is hosting the Tokyo International Conference for African Development (Ticad) summit. And Japan’s prime minister, Shinzo Abe, is the co-host.

He warned African leaders about the dangers of accumulating too much debt, the AFP news agency reports. His comments are seen as a snarky warning about China’s role in Africa as Beijing is said to favour its own companies for big infrastructure projects.

He told the leaders attending the development conference in Yokohama that Japan was promoting “quality” investments to be supported by Japanese institutions, the agency reports.

Unlike China, Japan says sound financial advice and support is behind its Africa strategy.

Tokyo plans to train experts in 30 African countries in the next three years on how to manage risk and public debts, it says. It wants to send financial experts to debt-ridden countries on multi-year missions to help them improve their finances and thus avoud the “Chinese debt trap”: overborrowing from the Chinese, being dependent on the Chinese for financing and having to sell assets to repay the debts.

He said more entrepreneurs should be encouraged to improve economies on the continent.

“If partner countries are deeply in debt, it interferes with everyone’s efforts to enter the market,” the Japanese prime minister was quoted as saying.

 

 

 

 

Only in Japan

Japan bans dual citizenship. But, “The law creates a duty to remove your other citizenship but failing to do so is not a crime,” FT quoted an expert as saying.

Asia holds up Hermes

If Chinese, Japanese and other Asians stopped buying Hermes products …

Downside of banks heavy IT spending

All three local banks are spending big time on sophisticated IT investments to build digital platforms to among other things win customers, and lower credit costs and loan defaults. DBS has won awards and, better still, a premium rating vis-avis other regional banks for its efforts.

But Suruga Bank shows what can go badly wrong.

Suruga Bank was the poster gal in Japanese banking. It spent money on sophisticated IT inves tments to lower credit costs and loan defaults. And it had lower credit costs and loan defaults compared to its peers despite being an aggressive lender. But this IT spending resulted in higher running costs.

Well a recent report found that the bank was riddled with office bullying, fraudulent activity and impossible sales targets. These were all related to the need for revenue to fund its higher running costs.

 

 

If u missed going long on Vix volatility

Try this trade courtesy of FT?

Sticking with Japan, its government bond market has been astonishingly calm in recent years. Reflecting the Bank of Japan’s “yield curve control” policy, coupled with negative interest rates has kept 30-day average volatility of the JGB futures contract at just 0.88 per cent. That is the lowest since at least 1985 and compares to the US Treasury contract’s 3.88 per cent volatility.

Daniel Stone, co-founder of hedge fund Ionic Capital Management, reckons that one of the best trades in markets today is betting on this calm being shattered. He points out that it is “extremely” cheap to buy derivatives that give investors exposure to Japanese bond turbulence over the next five years, and estimates that just a 40 basis point move in the market’s implied volatility would more than double an investor’s money. A bigger 150 bps move would net investors a sevenfold return.

PAPpies do imitate the Japs

Don’t ever say our leaders don’t imitate the Japanese even if I said they didn’t

— Learn from Japanese — set example leh elites

— The Japanese story PM didn’t tell us

The following extracts could be Japanese PM Abe saying, “It’s not a failure. We’re working hard.”*

Improving rail reliability is a “multi-year war”, said Mr Khaw, who added that calling for a leadership change with each disappointment would be a “sure strategy for failure”

SMRT: The cock that Khaw talks

And

“Much progress has been made with the inculcation of a positive work culture, but there remain some deep-seated cultural issues within the company that has needed more time than anticipated to root out.”

Where’s Khaw? (cont’d) 

Meanwhile following the traditional Japanese bowing

Chairman of SMRT Corporation and SMRT Trains Seah Moon Ming bowed and apologised to the public for the underground flooding incident along the North-South Line (NSL) on Oct 7-8 that resulted in a 20-hour disruption.

---

*Responding to a complaint by mothers that their children did not places in child care centres, the Japanese PM insisted that 500,000 more nursery places would be available by the end of 2017. “It’s not a failure. We’re working hard,” Abe said, the BBC reported in 2016.

A really tough boss

If you work for me … you’ll never be fired for lacking talent, but don’t count on taking many holidays. If you buy shares in the $27 billion electronics giant I started in a shack beside my mother’s farmhouse, forget about asking for bigger dividends. Even if you’re Masayoshi Son, the second-richest man in Japan, you can expect an earful when I think you’re wrong.

And

Too many young people are content with only “small happiness,” like going home to their children in the evening rather than working late to become their company’s next president.

http://www.bloomberg.com/news/articles/2016-08-11/the-eccentric-billionaire-who-ignores-investors-to-get-them-rich

Japan Inc’s investments in Asean infrastructure include S’pore

JBIC– Japan Bank for International Cooperation

Why PM won’t heed Jap PM’s tots

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?

After all Goh Chok Tong said we should be like the Japanese. And PM and ministers cite Japanese practices: here, here and here.

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.

Japs prefer S’pore to France, Sweden. Korea

S’pore not part of Apple’s ecosystem

Neither is M’sia or SE Asia. It’s Northern Asia. I blogged yonks ago that we are part of the Microsoft ecosystem.

Don’t overlook these high SGX highish yielders

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)

And

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).

Tourism potential of Indon, Vietnam & Burma

Number of foreign visitors received in 2013

• Thailand – 26.5 million
• Malaysia – 25.7 million
• Hong Kong – 25.6 million
• South Korea – 12.1 million
• Japan – 10.3 million
• Indonesia – 8.8 million
• Vietnam – 7.5 million
• Myanmar – 2 million

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.

A fertility gift for next yr’s baby packs

Something for the parents: packets of secretly punctured condoms.

a local official in Aichi prefecture set out a daring proposal. Tomonaga Osada suggested that the authorities could distribute secretly punctured condoms to young married couples, who would then get to work boosting the birth rate. His unorthodox ploy won few supporters, yet it reflects a gathering concern about Japan’s demographic plight. Last year just over 1m babies were born, far fewer than the number needed to maintain the population, which is expected to drop from 127m to around 87m by 2060. – See more at: http://www.economist.com/blogs/economist-explains/2014/07/economist-explains-16#sthash.N9pg7bk9.dpuf

Now the serious stuff. The article also points out that in Japan: “the rising cost of child-rearing often imposes a de facto one-child policy.”

This is the problem here too, something that the govt here refuses to acknowledge. I have yet to meet a parent who  doesn’t say  the govt’s allowances for them doing NS in the bedroom is peanuts.

Banyan also points out also points out that job insecurity in Japan is making it hard for young married couples to decide to start families. Again this would apply here especially since young PMEs are more expensive than their FT counterparts.

Banyan suggests, “If companies gave greater protections to new, young hires in return for lessening the privileges of other employees, young couples would have a more stable basis on which to marry and raise families.” Well this would help here too.

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

Why Japs smarter than Singkies

http://im.ft-static.com/content/images/c272b0ac-d4f9-11e3-adec-00144feabdc0.img.

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.

 

S$, Baht & Rupiah looking gd

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.

http://www.cnbc.com/id/101390521

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.

 

Tan Kuku for tsunami of Jap $ in 2014

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.

Japan keeps Asean’s economies motoring along

Asean round-up

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.

Background

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

Cambodia’s growing

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.

http://www.bbc.co.uk/news/business-23429693

Vietnam R private equity

http://blogs.reuters.com/breakingviews/2013/07/18/vietnam-is-back-in-the-game-for-buyout-firms/

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