Osaka - Sunday, February 27, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy, reported on February 25 that Japan (public and private sectors) will invest total of 110 billion yen in rare earth metals in order to shed its excessive dependence on China.
The objective of the investment is to change the supply structure of rare earth metals that is highly dependent on China. This is urgent because China has been drastically limiting rare earth metal export, as mentioned in the previous article Risk Management and Interdependence in Today’s Global Economy.
The initiative will involve 160 businesses from 110 companies and the government will give financial assistance of equipment investment.
1. What is the background and objective of rare earth metal investment?
1) Shed its excessive dependence on China to reduce risk
The investment would decrease risk for Japan. In the latter half of 2010 import of rare earth metals from China once terminated. The Chinese authorities have also reduced allocation of rare earth metal export. Currently 90% of rare earth metals used in Japan are those imported from China and excessive dependence on China is a very high risk for Japan.
2) Decrease outflow of technology
The financial assistance from the government would help globally competitive manufacturing sites remain in Japan, which means decrease in outflow of technology. Chinese government has been promoting investment of Japanese component manufacturers in their country using stable supply of rare earth metals as its reason. It is because high tech components made from rare earth metals are extremely globally competitive. By providing financial assistance to Japanese component manufacturers that utilize rare earth metals, the Japanese government would like to retain such globally competitive manufacturing sites in Japan.
2. What is the overview of the initiative?
The initiative is led by METI (Ministry of Economy, Trade and Industry), which selected 160 businesses from 110 companies that align with the government’s financial assistance policy. It is decided to that total of 33.1 billion yen will be provided. 9 billion yen will be invested to seek additional businesses.
The companies are to start the investment from 2011, aiming to reduce import of rare earth metals from China by approximately 30%. Currently as much as 30,000 ton of rare earth metals from China are used in Japan, and 10,000 ton of them will be reduced in mid/long term.
3. How will rare earth metal import from China reduced?
1) Reduction in use of volume and recycling
An affiliate of Konica Minolta will implement new equipment that efficiently uses cerium oxide as glass abrasive.
Mitsubishi Trading and Dido Steel make alliance with a venture company specialized in this realm to start a new business with the objective of reducing use of dysprosium by 40% in neodymium magnets production that are used in motors of EV cars.
Hitachi Metals plans to recycle refuse of manufacturing process of neodymium magnet.
2) Diversification of supply
Rare earth metals imported from the U.S. and Australia will be used and initiatives to drive such diversification of rare earth metal supply are driven by companies.
Rare earth metals from China are usually processed as alloys before imported to Japan but the U.S. and Australia are still behind in alloy process equipment. For this reason, Mitsui Mining and Smelting and Japan Metals & Chemicals will import rare earth metals in the form of raw stone and then process as alloys in Japan. Leveraging the knowhow, the two companies also plans to implement a new equipment to extract rare earth metals Nickel-metal-hydride batteries collected from around the globe.
Rare metal import from other countries such as Vietnam and Brazil is being studied as well.
3) Examination of new components
Reduction of rare earth metals and use of rare earth metals that are different from previous ones (i.e. those imported from countries other than China) means change in constituent. This means it is quite possible that performance of motors and catalysts change.
For this reason, leading automobiles companies including Toyota, Honda and Nissan will implement equipment to examine use of such new components for EV cars as a part of their development of motors and catalysts of EV cars.
Kureha Corporate will implement testing and evaluation equipment as apart of their load material development of lithium-ion battery.
2011年2月13日日曜日
The First Chinese Accounting Firm Enters Japan
Osaka - Sunday, February 13, 2011
Nikkei, Japan’s leading newspaper specialized in business and economy reported in its evening newspaper on February 12 that a leading Chinese Accounting Firm is to establish its first office in Japan. This is the first Chinese Accounting Firm to start business in Japan.
The firm is to support from accounting perspective Chinese companies starting business in Japan such as establishing affiliates or joint ventures in Japan. It is quite possible that the entry triggers global accounting network originating in China to expand worldwide.
1. What is the background of the first Chinese accounting firm entering Japan?
It is the fact that Chinese companies are extremely proactive in investing in Japan, especially M&A, as mentioned in the previous article Japanese Companies Leverage China / Asia Capital for Survival.
In fact, the number of M&A in Japan (acquisition of Japanese companies) by Chinese and Hong Kong companies has been increasing since 2000 and the pace has speeded up in the last year.
The number of M&A was around 10 in 2000 and has remained below 15 until 2005 but increased to above 20 in 2007. And, in 2010 the number jumped from around 25 in 2009 to over 35 in 2010.
2. Which Chinese accounting firm enters Japan?
It is Shinewing Certified Public Accountants, based in Beijing, China, that enters Japan. They have already completed registration. Japanese accounting professionals operating in China are the certified accountants.
3. What is the plan?
The company plans to officially start their business in Japan this spring, and increase the staff to approximately 10 by the end of this year.
Their core business is to support accounting and audit of affiliates and joint ventures of Chinese companies and to support M&A in Japan of Chinese companies. The company also would like to support Japanese companies investing in China.
The country manager of the Japan office commented that Japanese products are of high quality and globally competitive even though the price might be high. He also commented that Chinese companies are extremely interested in market, technology and know-how of business administration of Japan.
4. Positioning of Shinewing Certified Public Accountants
Revenue of Shinewing Certified Public Accountants is third in China, excluding western accounting firms such as PricewaterhouseCoopers. It has been supporting approximately 300 Japanese companies operating in China. It already has offices in other countries such as Australia and Singapore.
Chinese government is currently strengthening education of accountants. For this reason, they would like to expand accounting network of Chinese accounting firms by initiatives such as encouraging M&A of accounting firms/offices. The first office of in Japan is part of their initiative.
Nikkei, Japan’s leading newspaper specialized in business and economy reported in its evening newspaper on February 12 that a leading Chinese Accounting Firm is to establish its first office in Japan. This is the first Chinese Accounting Firm to start business in Japan.
The firm is to support from accounting perspective Chinese companies starting business in Japan such as establishing affiliates or joint ventures in Japan. It is quite possible that the entry triggers global accounting network originating in China to expand worldwide.
1. What is the background of the first Chinese accounting firm entering Japan?
It is the fact that Chinese companies are extremely proactive in investing in Japan, especially M&A, as mentioned in the previous article Japanese Companies Leverage China / Asia Capital for Survival.
In fact, the number of M&A in Japan (acquisition of Japanese companies) by Chinese and Hong Kong companies has been increasing since 2000 and the pace has speeded up in the last year.
The number of M&A was around 10 in 2000 and has remained below 15 until 2005 but increased to above 20 in 2007. And, in 2010 the number jumped from around 25 in 2009 to over 35 in 2010.
2. Which Chinese accounting firm enters Japan?
It is Shinewing Certified Public Accountants, based in Beijing, China, that enters Japan. They have already completed registration. Japanese accounting professionals operating in China are the certified accountants.
3. What is the plan?
The company plans to officially start their business in Japan this spring, and increase the staff to approximately 10 by the end of this year.
Their core business is to support accounting and audit of affiliates and joint ventures of Chinese companies and to support M&A in Japan of Chinese companies. The company also would like to support Japanese companies investing in China.
The country manager of the Japan office commented that Japanese products are of high quality and globally competitive even though the price might be high. He also commented that Chinese companies are extremely interested in market, technology and know-how of business administration of Japan.
4. Positioning of Shinewing Certified Public Accountants
Revenue of Shinewing Certified Public Accountants is third in China, excluding western accounting firms such as PricewaterhouseCoopers. It has been supporting approximately 300 Japanese companies operating in China. It already has offices in other countries such as Australia and Singapore.
Chinese government is currently strengthening education of accountants. For this reason, they would like to expand accounting network of Chinese accounting firms by initiatives such as encouraging M&A of accounting firms/offices. The first office of in Japan is part of their initiative.
2010年3月13日土曜日
Why Investment Shift from Japan to Overseas?
Osaka – Saturday, March 13, 2010
Following the previous article Why Production Shift from Japan to Overseas? in which electronic component production of Japanese companies shifting from Japan to overseas is explained, how investment of major foreign capital is shifting from Japan to emerging countries is explained in this article.
Lately major foreign capital companies have been withdrawing from Japan business (production and sales) one after the other. According to balance of payments statistics, direct investment to Japan for 2009 has decreased by 55.7% vs. 2008. This is because major foreign capitals have been prominently shifting their investment destination from Japan to other countries, especially to emerging countries. Japan may well need to review and improve investment environment such as decreasing corporate tax and de-regulation.
1. How is investment from major foreign capitals shifting from Japan to overseas (emerging countries)?
According to Nikkei’s article issued on March 10, major foreign capitals such as Michelin, a tyre manufacturer giant based in France, Hyundai, automobile giant based in Korea, and fuel cell system giant based in Canada are withdrawing from Japan. They have been increasing their investment in emerging countries, and therefore this means they are shifting their investment destination from Japan to emerging countries, with the objective of making the most of rapidly growing demand of emerging market.
Major Foreign Capitals That Have Downsized / Withdrawn from Business in Japan
(Source: Nikkei, edited and translated by the author)
Company Name / Based In / Business Type / Decision/Action
Michelin / France / Tyre production / Close Ohta Plant in Gunma Prefecture
Liberty Global / U.S. / CATV / Sell share holding of JV and withdraw
Prudential / U.K. / Life insurance sales / Terminate new sales by PCA Insurance under umbrella of Prudential
Carrefour / France / Supermarket / Terminate contract (name usage etc.) with AEON
Hyundai / Korea / Passenger car sales / Negotiate with dealers to terminate passenger car sales
Versace / Italy / High-end brand apparel sales / Close stores and withdraw
Office Depot / U.S. / Office equipment sales / Withdraw from sales (excluding mail order)
Michelin will close its Ohta plant in Gunma Prefecture (380 employees) in July 2010. It has been successfully manufacturing high quality tyers but profitability deteriorated with the worldwide economic crisis. On the other hand, Michelin will construct a new plant, investing 40 billion rupee (approximately 76 billion yen) in South India that manufactures tyers for buses and trucks.
Hyundai Motor Japan, Japan office of Hyundai located in Tokyo, terminated its new sales of passenger cars. They will continue sales of buses. Instead, Hyundai will invest 8,000 million USD (approximately 70.4 billon yen) in China to construct their new plant in Beijing, which will be their third plant in China. They aim to start operating the new plant in the end of November, 2010.
Withdrawal is in process even in promising industries. Ballard Power Systems, a fuel cell giant based in Canada (British Columbia), has liquidated joint venture with a Japanese fuel cell manufacturing giant in 2009. Ballard Power Systems do not intend to continue business in Japan. Instead, they have invested to a telecommunication equipment manufacturer based in Denmark in January 2010.
Liberty Global, a media giant based in the U.S., sold JCOM stock it had owned by over 360 billion yen to KDDI and withdrawn from Japan CATV business. The reason is, according to Liberty spokesman, “roadmap to increase penetration rate for households of paid content in Japan to the level of western countries cannot be developed and executed”. Liberty has acquired CATV giant based in Germany by approximately 3.5 Euro (approximately 420 billion yen) in the end of January 2010.
Withdrawal from Japanese capital market is also prominent. Number of non-Japanese companies listed in TSE (Tokyo Stock Exchange) was at the peak with 127 companies in 1991 but has been on the decline and currently only 15 as of March 9, 2010. And in the end of March 2010, Aegon based in Holland is to be de-listed, and in April UBS based in Switzerland. There has not been new listing since 2008.
2. How is Japan attractive as investment destination？ (From a survey result)
According to the survey result of a global leading consulting company, attractiveness of Japan an investment destination is drastically decreasing. The survey was implemented to management executives from 1000 global companies. The result was that Japan, which was #15 in 2007, fell to below #26 (ranking is available for the top 26 only) in 2010. China has been #1 for 6 consecutive years from 2002, and Brazil rose up to #4.
A retail giant based in China planning to invest to Laox, a Japanese leading mass merchandiser of consumer electronics; however, such a case is an exception.
3. Why Japan’s attractiveness as an investment destination decreasing?
The main reason why Japan’s attractiveness as an investment destination is decreasing is that Japan’s expected growth is low, especially compared with emerging countries such as China and India, after the worldwide economic crisis. This attributes highly to low birthrate and to deflation mentioned in the previous article How Japan Can Get Out From 10 Year Deflation? Thus, more and more global companies are not counting Japan as an investment destination.
4. How could Japan’s attractiveness as an investment destination recover?
With low expected growth, possible way that Japan’s attractiveness as an investment destination can be recovered is by improving its investment environment. First measure is lowering corporate tax because as mentioned in the previous article Japanese Tax Haven Application Rule to Change, corporate tax of Japan is as high as 40%, which is much higher than other countries. Second measure is de-regulation. The author would say that the industry that needs de-regulation the most is agriculture, although its regulation has softened around 1990 once, when import of beef and oranges was de-regulated. The author also feels that there are other industries that need de-regulation if Japan is to become competitive.
Japan need to improve its global competitiveness, attracting investment and business (production, sales etc.) of global companies regardless of its nationality, to survive, grow and increase tax. This is the requirement for Hatoyama administration to achieve its goal and realize its strategy, mentioned in the previous article How Japan's Growth Strategy Shoud Be?
Following the previous article Why Production Shift from Japan to Overseas? in which electronic component production of Japanese companies shifting from Japan to overseas is explained, how investment of major foreign capital is shifting from Japan to emerging countries is explained in this article.
Lately major foreign capital companies have been withdrawing from Japan business (production and sales) one after the other. According to balance of payments statistics, direct investment to Japan for 2009 has decreased by 55.7% vs. 2008. This is because major foreign capitals have been prominently shifting their investment destination from Japan to other countries, especially to emerging countries. Japan may well need to review and improve investment environment such as decreasing corporate tax and de-regulation.
1. How is investment from major foreign capitals shifting from Japan to overseas (emerging countries)?
According to Nikkei’s article issued on March 10, major foreign capitals such as Michelin, a tyre manufacturer giant based in France, Hyundai, automobile giant based in Korea, and fuel cell system giant based in Canada are withdrawing from Japan. They have been increasing their investment in emerging countries, and therefore this means they are shifting their investment destination from Japan to emerging countries, with the objective of making the most of rapidly growing demand of emerging market.
Major Foreign Capitals That Have Downsized / Withdrawn from Business in Japan
(Source: Nikkei, edited and translated by the author)
Company Name / Based In / Business Type / Decision/Action
Michelin / France / Tyre production / Close Ohta Plant in Gunma Prefecture
Liberty Global / U.S. / CATV / Sell share holding of JV and withdraw
Prudential / U.K. / Life insurance sales / Terminate new sales by PCA Insurance under umbrella of Prudential
Carrefour / France / Supermarket / Terminate contract (name usage etc.) with AEON
Hyundai / Korea / Passenger car sales / Negotiate with dealers to terminate passenger car sales
Versace / Italy / High-end brand apparel sales / Close stores and withdraw
Office Depot / U.S. / Office equipment sales / Withdraw from sales (excluding mail order)
Michelin will close its Ohta plant in Gunma Prefecture (380 employees) in July 2010. It has been successfully manufacturing high quality tyers but profitability deteriorated with the worldwide economic crisis. On the other hand, Michelin will construct a new plant, investing 40 billion rupee (approximately 76 billion yen) in South India that manufactures tyers for buses and trucks.
Hyundai Motor Japan, Japan office of Hyundai located in Tokyo, terminated its new sales of passenger cars. They will continue sales of buses. Instead, Hyundai will invest 8,000 million USD (approximately 70.4 billon yen) in China to construct their new plant in Beijing, which will be their third plant in China. They aim to start operating the new plant in the end of November, 2010.
Withdrawal is in process even in promising industries. Ballard Power Systems, a fuel cell giant based in Canada (British Columbia), has liquidated joint venture with a Japanese fuel cell manufacturing giant in 2009. Ballard Power Systems do not intend to continue business in Japan. Instead, they have invested to a telecommunication equipment manufacturer based in Denmark in January 2010.
Liberty Global, a media giant based in the U.S., sold JCOM stock it had owned by over 360 billion yen to KDDI and withdrawn from Japan CATV business. The reason is, according to Liberty spokesman, “roadmap to increase penetration rate for households of paid content in Japan to the level of western countries cannot be developed and executed”. Liberty has acquired CATV giant based in Germany by approximately 3.5 Euro (approximately 420 billion yen) in the end of January 2010.
Withdrawal from Japanese capital market is also prominent. Number of non-Japanese companies listed in TSE (Tokyo Stock Exchange) was at the peak with 127 companies in 1991 but has been on the decline and currently only 15 as of March 9, 2010. And in the end of March 2010, Aegon based in Holland is to be de-listed, and in April UBS based in Switzerland. There has not been new listing since 2008.
2. How is Japan attractive as investment destination？ (From a survey result)
According to the survey result of a global leading consulting company, attractiveness of Japan an investment destination is drastically decreasing. The survey was implemented to management executives from 1000 global companies. The result was that Japan, which was #15 in 2007, fell to below #26 (ranking is available for the top 26 only) in 2010. China has been #1 for 6 consecutive years from 2002, and Brazil rose up to #4.
A retail giant based in China planning to invest to Laox, a Japanese leading mass merchandiser of consumer electronics; however, such a case is an exception.
3. Why Japan’s attractiveness as an investment destination decreasing?
The main reason why Japan’s attractiveness as an investment destination is decreasing is that Japan’s expected growth is low, especially compared with emerging countries such as China and India, after the worldwide economic crisis. This attributes highly to low birthrate and to deflation mentioned in the previous article How Japan Can Get Out From 10 Year Deflation? Thus, more and more global companies are not counting Japan as an investment destination.
4. How could Japan’s attractiveness as an investment destination recover?
With low expected growth, possible way that Japan’s attractiveness as an investment destination can be recovered is by improving its investment environment. First measure is lowering corporate tax because as mentioned in the previous article Japanese Tax Haven Application Rule to Change, corporate tax of Japan is as high as 40%, which is much higher than other countries. Second measure is de-regulation. The author would say that the industry that needs de-regulation the most is agriculture, although its regulation has softened around 1990 once, when import of beef and oranges was de-regulated. The author also feels that there are other industries that need de-regulation if Japan is to become competitive.
Japan need to improve its global competitiveness, attracting investment and business (production, sales etc.) of global companies regardless of its nationality, to survive, grow and increase tax. This is the requirement for Hatoyama administration to achieve its goal and realize its strategy, mentioned in the previous article How Japan's Growth Strategy Shoud Be?
2009年11月29日日曜日
Japanese Companies Refraining from Equipment Investment
November 29, 2009 – Osaka, Japan
Today Nikkei, Japan’s leading newspaper specialized in economy/business and politics, reported that according to their survey result, total equipment investment* for 2009 is -17.6% from 2008 which is the biggest drop since 1990, and is also -2.7% from the original plan made in the beginning of 2009. Although business environment seems to started to improve and many companies have been making upward revision their financial performance estimation, economy outlook is not bright with drastic high yen etc. Thus in general, Japanese companies are refraining from aggressive investment, especially major manufacturers such as automobile and consumer electronics.
2009 Revised Equipment Investment Plan (In million yen)
(Source: Nikkei, translated by the author)
Industry / No. of Companies / 2009 Revised Plan (vs. 2008) / Vs. the Original Plan / 2008 Performance (Vs. 2007)
Total Industry / 1,598 / 22,668,971 (-17.6) / -2.7 / 27,525,633 (-6.1)
(Excluding Electricity) / 1,589 / 20,137,434 (-19.9) / -2.9 / 25,137,427 (-7.8)
Manufacturers / 810 / 11,715,060 (-26.1) / -3.2 / 15,847,995 (-8.2)
The survey of equipment investment trend (based on revised plan of 1,598 companies) was executed in October. According to the result, the total equipment investment has decreased from previous year for 2 consecutive years; 2008 was -6.1 from 2007 and 2009 was -17.6% from 2008. This is primarily because manufacturers’ drop is as big as -26.1%. Non-manufacturers’ is -6.2% which is comparatively small but it is second to -9.1% in 2002 when IT bubble collapsed.
Looking by industry, among 17 manufacturers, 15 excluding food and pharmaceuticals are minus from 2008, among which 7 industries including automobile, machinery and electronics are decrease in more than 30%. For non-manufacturers, 4 industries including electricity (+6%) and transportation (+10.3) are plus from 2008 but the remaining 12 industries including telecommunications and retailers are minus.
In addition, many companies are further cutting investment from the original plan. For example, Nippon Steel Corporation cut its original plan of investment for production capacity increase by 50 billion yen to 340 billion yen, and Toyota cut by 70 billion yen to 760 billion yen, leading to -3.2% from the original plan for overall manufacturers. Non-manufacturers’ is -2.2% from the original plan, which is minus in 11 years, attributing especially to maritime transportation (-30.7%) and land transportation (-10%).
According to the government, flash report of July-Sep GDP is +4.8% from the previous quarter which is plus for 2 consecutive quarters and equipment investment also increased after 6 quarters. This may well mean that production that had once dropped due to global economic crisis started to recover; however, there are anxieties of another plunge in economy and high yen. When looked by yearly, it is quite possible that companies are really tightening their investment.
If this circumstance should continue, an expert points out that with companies relying more on their revenue from external demand, it cannot be avoided that equipment will be invested overseas.
* Equipment Investment and Economy
(Source: Nikkei, edited and translated by the author)
Equipment investment of companies is an important constituent of GDP, and is a metrics of business climate outlook. Increase in investment means that economy is expanding, and decrease in investment means plunge in economy. In general, GDP growth rate and equipment investment increase-decrease rate are linked in many cases.
Primary objectives of investment include increase in production, renewal of old equipment and countermeasures of safety and environment. Investments such as new factory construction and implementation of large machinery have big positive impact on related industries and leads to economic expansion.
Today Nikkei, Japan’s leading newspaper specialized in economy/business and politics, reported that according to their survey result, total equipment investment* for 2009 is -17.6% from 2008 which is the biggest drop since 1990, and is also -2.7% from the original plan made in the beginning of 2009. Although business environment seems to started to improve and many companies have been making upward revision their financial performance estimation, economy outlook is not bright with drastic high yen etc. Thus in general, Japanese companies are refraining from aggressive investment, especially major manufacturers such as automobile and consumer electronics.
2009 Revised Equipment Investment Plan (In million yen)
(Source: Nikkei, translated by the author)
Industry / No. of Companies / 2009 Revised Plan (vs. 2008) / Vs. the Original Plan / 2008 Performance (Vs. 2007)
Total Industry / 1,598 / 22,668,971 (-17.6) / -2.7 / 27,525,633 (-6.1)
(Excluding Electricity) / 1,589 / 20,137,434 (-19.9) / -2.9 / 25,137,427 (-7.8)
Manufacturers / 810 / 11,715,060 (-26.1) / -3.2 / 15,847,995 (-8.2)
The survey of equipment investment trend (based on revised plan of 1,598 companies) was executed in October. According to the result, the total equipment investment has decreased from previous year for 2 consecutive years; 2008 was -6.1 from 2007 and 2009 was -17.6% from 2008. This is primarily because manufacturers’ drop is as big as -26.1%. Non-manufacturers’ is -6.2% which is comparatively small but it is second to -9.1% in 2002 when IT bubble collapsed.
Looking by industry, among 17 manufacturers, 15 excluding food and pharmaceuticals are minus from 2008, among which 7 industries including automobile, machinery and electronics are decrease in more than 30%. For non-manufacturers, 4 industries including electricity (+6%) and transportation (+10.3) are plus from 2008 but the remaining 12 industries including telecommunications and retailers are minus.
In addition, many companies are further cutting investment from the original plan. For example, Nippon Steel Corporation cut its original plan of investment for production capacity increase by 50 billion yen to 340 billion yen, and Toyota cut by 70 billion yen to 760 billion yen, leading to -3.2% from the original plan for overall manufacturers. Non-manufacturers’ is -2.2% from the original plan, which is minus in 11 years, attributing especially to maritime transportation (-30.7%) and land transportation (-10%).
According to the government, flash report of July-Sep GDP is +4.8% from the previous quarter which is plus for 2 consecutive quarters and equipment investment also increased after 6 quarters. This may well mean that production that had once dropped due to global economic crisis started to recover; however, there are anxieties of another plunge in economy and high yen. When looked by yearly, it is quite possible that companies are really tightening their investment.
If this circumstance should continue, an expert points out that with companies relying more on their revenue from external demand, it cannot be avoided that equipment will be invested overseas.
* Equipment Investment and Economy
(Source: Nikkei, edited and translated by the author)
Equipment investment of companies is an important constituent of GDP, and is a metrics of business climate outlook. Increase in investment means that economy is expanding, and decrease in investment means plunge in economy. In general, GDP growth rate and equipment investment increase-decrease rate are linked in many cases.
Primary objectives of investment include increase in production, renewal of old equipment and countermeasures of safety and environment. Investments such as new factory construction and implementation of large machinery have big positive impact on related industries and leads to economic expansion.
2009年9月19日土曜日
New Coalition Government Policy, High Yen and Supply & Demand Oppressing Japanese Companies, Being Behind Worldwide High Stock Prices Trend
Sunday, September 19, 2009 – Osaka, Japan
Nikkei, Japan's leading newspaper specialized in economy and politics, reported today that Japan is behind worldwide trend of high stock prices. This is because of the stock price drop of companies especially those engaged in business related to investment in public sector and finance, even though stock prices of electronics benefitting from demand recovery of ubiquitous networking devices and energy benefitting from increase in international commodity price have risen. This implies that majority of Japanese companies may well be negatively impacted due to the 3 anxieties, and same goes for Japan branch of foreign capitals.
Nikkei reports that although global slowdown is observed to have hit the bottom is supporting the lower price, 3 anxieties are acting as oppression burden, leading to drop in stock prices of majority of Japanese companies. The 3 anxieties are:- a)uncertainty of new policy under coalition; b)anxiety of further proceeding of high yen; and c)deterioration of supply & demand attributing to decrease in investing from foreign capital.
The new ruling party of the DPJ advocates that manufacturing companies basically should stop utilizing dispatched employees, and this would mean increase in their cost in general. The DPJ also advocates 25% reduction of CO2 emission vs.1990 by 2020, which is in line with global trend, but could be a big burden for iron and steel manufacturers and electric power companies. Furthermore, the recent comment about moratorium of Mr. Kamei, the new Financial Services Minister who is also responsible for postal services, already had impacted negatively to the Japan stock market.
And the recent comment of Mr. Fujii, the new Treasury Minister, could be interpreted as accepting high yen, leading to the second anxiety. The assumed exchange rate for 2009 major manufacturing companies announced by Tankan in July was 1 US dollars = 94.85 yen, but the recent exchange rate had been of higher yen than this already. This means that expectation for upward adjustment of financial achievement could recede.
Attitude of foreign investors who had been the only investor of Japanese stocks is changing because they want to see how the new coalition government takes off. Indeed, they had been active in buying Japanese stocks from April to August this year but in September they had been selling more than buying.
Looking at the ranking of fluctuation of their average stock price after the general election on August 30, top 10 companies that had gone up are mostly electronics and energy companies. The no.1 company of SUMCO (an electronics company) went up as much as15%. On the other hand, the worst 10 companies, i.e. companies whose stock price dropped the most after the general election are mostly financial institutes.
Since stock price tends to lead the actual business and economy, the above fact is an implication of the possible challenges the companies face in the upcoming future. Also, although the above is all about Japanese companies, it is possible that Japan branches of foreign capitals are to be impacted similarly because they are players in the same game; they operate in the same Japanese business environment and under the same Japanese regulation.
Nikkei, Japan's leading newspaper specialized in economy and politics, reported today that Japan is behind worldwide trend of high stock prices. This is because of the stock price drop of companies especially those engaged in business related to investment in public sector and finance, even though stock prices of electronics benefitting from demand recovery of ubiquitous networking devices and energy benefitting from increase in international commodity price have risen. This implies that majority of Japanese companies may well be negatively impacted due to the 3 anxieties, and same goes for Japan branch of foreign capitals.
Nikkei reports that although global slowdown is observed to have hit the bottom is supporting the lower price, 3 anxieties are acting as oppression burden, leading to drop in stock prices of majority of Japanese companies. The 3 anxieties are:- a)uncertainty of new policy under coalition; b)anxiety of further proceeding of high yen; and c)deterioration of supply & demand attributing to decrease in investing from foreign capital.
The new ruling party of the DPJ advocates that manufacturing companies basically should stop utilizing dispatched employees, and this would mean increase in their cost in general. The DPJ also advocates 25% reduction of CO2 emission vs.1990 by 2020, which is in line with global trend, but could be a big burden for iron and steel manufacturers and electric power companies. Furthermore, the recent comment about moratorium of Mr. Kamei, the new Financial Services Minister who is also responsible for postal services, already had impacted negatively to the Japan stock market.
And the recent comment of Mr. Fujii, the new Treasury Minister, could be interpreted as accepting high yen, leading to the second anxiety. The assumed exchange rate for 2009 major manufacturing companies announced by Tankan in July was 1 US dollars = 94.85 yen, but the recent exchange rate had been of higher yen than this already. This means that expectation for upward adjustment of financial achievement could recede.
Attitude of foreign investors who had been the only investor of Japanese stocks is changing because they want to see how the new coalition government takes off. Indeed, they had been active in buying Japanese stocks from April to August this year but in September they had been selling more than buying.
Looking at the ranking of fluctuation of their average stock price after the general election on August 30, top 10 companies that had gone up are mostly electronics and energy companies. The no.1 company of SUMCO (an electronics company) went up as much as15%. On the other hand, the worst 10 companies, i.e. companies whose stock price dropped the most after the general election are mostly financial institutes.
Since stock price tends to lead the actual business and economy, the above fact is an implication of the possible challenges the companies face in the upcoming future. Also, although the above is all about Japanese companies, it is possible that Japan branches of foreign capitals are to be impacted similarly because they are players in the same game; they operate in the same Japanese business environment and under the same Japanese regulation.
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