Japan 01 (May 08 - Dec 09)

[iam802]

so fast. beat me to it........

[winston]

More property failures, price falls seen for Japan

HONG KONG, Nov 6 (Reuters) - More bankruptcies, a deluge of distressed assets and a price slide are in store for Japan's ailing property industry, as banks recoil from the cheap loans that had fuelled a boom.

That was the grim assessment by investors at a conference session in Hong Kong this week, whose title drawn up a few months ago -- "Japan: a safe haven from the credit crunch?" -- betrayed the speed of the market's deterioration.

More than 3,000 builders and 425 property firms have failed this year with a combined debt of $25 billion, according to Tokyo Shoko Research. Notable recent victims, include developer Urban Corp and apartment builder C's Create Co.

And more pain lies ahead.

"A big negative spiral is coming," said Fred Uruma, chief executive of Touchstone Capital Securities, which specialises in property finance.

Total lending for property would probably fall to $8 billion this year from roughly $50 billion last year, Urama said, putting small and mid-sized developers and contractors in peril.

Banks, nudged by regulators in late 2007 to cut exposure to the industry, are mostly lending only to big firms, and cutting loan levels to 55-60 percent of a property's value, from as much as 80-90 percent a couple of years ago.

Among the major casualties are asset managers, who grew up with the seven-year-old market in real estate investment trusts (REIT), securities that are supposed to be stable because they pay most of their rent to investors as dividends.

Firms such as Kennedix, K.K. DaVinci Advisors (4314.OJ: Quote, Profile, Research, Stock Buzz), Pacific Management (8902.T: Quote, Profile, Research, Stock Buzz) and Creed (8888.T: Quote, Profile, Research, Stock Buzz) typically built or bought office blocks from developers, filled them with tenants and sold them on to REITs, which they often managed.

But as debt dried up, the whole model fell apart.

"LOUSY" ASSETS

Fund manager Re-Plus Inc, which sponsored Re-Plus Residential Investment 8986.T, set the trend by filing for bankruptcy protection in September.

Since then, Japan has seen its first REIT failure -- apartment landlord New City Residence Investment Corp 8965.T.

More REITs, property firms and fund managers are likely to hit the wall, which will spark a sale of assets and a further fall in prices of second- and third-grade buildings, said Satoru Yamashita, vice president of investment at Mitsui Fudosan Investment Advisors.

Because of a fall in values, top-notch Tokyo offices have seen their rental yields rise to around 4 percent, from 2.5 percent a couple of years ago, while yields on lower-grade buildings have widened to 5.5-6.0 percent from 4 percent.

"Some people are saying they will go back to where they started a few years ago, around 8 percent," Yamashita said of yields on second grade offices.

"There is still a lack of really good office buildings in Tokyo," he added. "But the companies facing difficulties don't own many prime assets."

Although foreign investors are sniffing around for bargains, the shortage of debt financing means only those willing to put down a lot of equity are snaring deals.

They include German open-ended funds that eschew borrowing, such as grundbesitz global, which bought a Tokyo office block in June, and Union Investment Real Estate, which plans to spend up to 4 billion euros in Asia over five years.

With Tokyo's REIT index losing 67 percent since a peak in May last year, property trusts should be prime acquisition targets for funds looking to take them private.

But Seth Sulkin, chief executive of retail property investor Pacifica Malls, said many assets owned by REITs were "lousy".

"I looked at one retail REIT, and even if we got it free it wouldn't make sense," Sulkin said. "With debt at 60 percent of book value, realistically I couldn't sell the properties fast enough even at a 40 percent discount."

If the distress continues, the government could well lean on the country's biggest property firms, such as Mitsui Fudosan and Mitsubishi Estate, to bail out struggling property firms, or at least buy assets.

Orix Corp (8591.T: Quote, Profile, Research, Stock Buzz) came to the rescue of struggling developer Joint Corp (8874.T: Quote, Profile, Research, Stock Buzz), injecting 10 billion yen into the firm in early September, and is also expected to help condominium builder Daikyo Inc (8840.T: Quote, Profile, Research, Stock Buzz), in which it is a major shareholder.

"Japan is a socialist country," said Touchstone Capital's Uruma. "If the government sees too many bankruptcies, they will force mergers. Large firms like Mitsui (Fudosan) will get the bad end of the stick."

[millionairemind]

As the market was rebounding.. guess who were the sellers???

TOKYO, Nov 7 (Reuters) - Foreign investors sold a net 497.3 billion yen ($5.09 billion) of Japanese stocks last week, capital flows data released by Japan's Ministry of Finance showed on Friday.
Details of net investments were as follows (in billion yen).
FOREIGN INVESTMENT IN JAPAN: (net) stocks bonds bills
Oct 26-Nov 1 -497.3 -306.2 -243.7
October 19-25 -277.0 -95.7 192.0
JAPANESE INVESTMENT ABROAD: (a minus sign indicates net selling
and inflow of funds into Japan) stocks bonds bills
Oct 26-Nov 1 420.3 1058.6 1.0
October 19-25 201.7 -912.2 -4.3

Note:
- As of the Jan. 14 release, the ministry changed its
calculation methods for weekly capital flows to match its balance
of payments figures.
- Bonds include beneficiary certificates.
- Figures are based on contracts and are rounded.
($1=97.71 Yen)
http://www.reuters.com/article/economic ... 2120081107

[millionairemind]

In Japan, small investors take a chance and jump in
By Martin Fackler Published: November 7, 2008

TOKYO: A global stock rout and fears of worldwide recession have sent millions of professional investors into panicked flight. But here a growing breed of contrarian investors sees opportunity after the Tokyo stock market reached a 26-year low recently.

Since last month, Japan's legions of household savers have poured into the market by the tens of thousands — many of them first-time investors — seizing the world financial crisis as the greatest buying opportunity in a generation.

Sitting atop $15 trillion in personal savings, they are snapping up equities, currencies and even riskier investments like index futures, to some extent replacing foreign investors and even helping drive a recent limited rally in Tokyo's beleaguered exchanges, say stock analysts.

"The stock market rout has popularized stock trading like nothing before," said Yuji Kusunoki, president of Rakuten Securities. "It's a paradox, but all the grim news has actually ended up making the market seem more attractive."

Individuals have emerged as the most active buyers on the exchange. Japanese individual investors were net buyers of $10 billion worth of stocks on the Tokyo Stock Exchange last month, according to Tokyo-based Daiwa Securities, compared with $2.1 billion in September. Foreign institutional investors were net sellers of some $7 billion in stocks the same month, the brokerage said.

And domestic stocks are also replacing foreign bonds and currencies as the investment of choice for Japanese individuals.

Reiko Fujiwara, a 37-year-old suburban homemaker, spent $20,000 of her family's savings last month to buy shares of a half dozen big Japanese companies like Nissan. Though long reluctant to play the market, her uncertainty was overwhelmed by her belief that stocks had been drastically oversold.

"I'm usually quite conservative," Fujiwara said. "But prices were just so cheap, it looked better than leaving my money in the bank." (She says she has broken even since she started investing in early October.)

Since the failure of Lehman Brothers, brokerages have reported an unprecedented surge in the numbers of new accounts being opened. At Rakuten Securities, one of Japan's biggest online brokerages, requests for applications to open new accounts have nearly quadrupled in two months, to some 33,000 in October.

About half of those applicants are first time investors, ranging from university students to retirees, but the largest number are white-collar workers in their 30s and 40s. The brokerage said it has also seen rising applications for currency and index future accounts.

This is not the first time Japan's amateur investors have emerged as a financial force. A couple of years ago, Japanese homemakers trading currencies online became a powerful investing bloc, named Mrs. Watanabes, who drove down the Japanese yen. Now, small-time Japanese are piling into their home market, going against the global trend. In doing so, they are overcoming traditional inhibitions here against stock trading. A nation of craftsmen and manufacturers, Japan long looked down on finance because its wealth was not fueled by the sweat of the brow.

The change has helped end a large outflow of yen overseas known as the yen-carry trade.

For years, Japanese households poured money into overseas assets, where they could earn better returns than in Japan with its near-zero interest rates. But in October, net investment in domestic stock mutual funds surpassed investment in foreign bond funds for the first time in 27 months, according to Nomura Research Institute, a Tokyo-based consulting company.

Many stock strategists say this influx has at least helped Tokyo's markets rebound some 26 percent from last month's lows, though they remain down 41 percent for the year. Interest has been particularly keen in blue chips such as Sony, Nissan and Toyota, whose prices have fallen so far that they are often trading at below book value. That means that these companies' buildings, equipment and other physical assets are worth more than the total of all their shares on the stock market.

[iam802]

I'm still waiting for the Jap govt. to do something about the Yen.

[millionairemind]

Sorry to disappoint..

BOJ Helpless as Yen Rises on Carry, UBS, Barclays Say (Update2)

By Ron Harui and Stanley White

Nov. 6 (Bloomberg) -- The Bank of Japan may be powerless to prevent the yen from rising to a 13-year high, according to the world's biggest foreign-exchange traders.

Deutsche Bank AG, UBS AG and Barclays Plc predict the yen will recover from its steepest weekly decline since 1999 as investors reduce carry trades that fund purchases of higher- yielding assets by borrowing in Japan. The currency will appreciate to 90 per dollar from 98.09 today in New York even if the Bank of Japan intervenes to stem the biggest annual gain since 1998, they said.

``Once the market realizes that we're now in a global recession, there's further deleveraging to come,'' said Geoff Kendrick, a senior currency strategist in London at UBS, the second-biggest trader in the $3.2 trillion-a-day market. Traders ``are capitulating'' after five years of bets against the yen, he said in a Nov. 4 interview.

http://www.bloomberg.com/apps/news?pid= ... refer=home

[kanglc]

When will they release the $$$ from Japan Post?

[iam802]

BOJ's Nakamura Says Economy May Deteriorate Further (Update2)

http://www.bloomberg.com/apps/news?pid= ... refer=home

Nov. 13 (Bloomberg) -- Japan's economy is at risk of deteriorating further as the global financial turmoil slows growth worldwide, central bank board member Seiji Nakamura said.

``A negative interaction between the global financial crisis and economic activity is slowing the world economy,'' Nakamura said today in a speech in Matsuyama, western Japan. ``Consequently, Japan could be on the verge of long-term economic adjustments and the downside risks to the economy are increasing further.''

The Bank of Japan cut interest rates last month for the first time in more than seven years in the wake of the worst global financial crisis since the Great Depression. Governor Masaaki Shirakawa last week said his board needs to focus on the risk that the economy will get worse because of the turmoil.

``Nakamura's comments highlighted the possibility that the economic downturn in the global economy, including Japan, may deepen,'' said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. ``The BOJ may cut rates to 0.1 percent by the end of December and go back to zero percent by the end of March.''

The Bank of Japan lowered its key interest rate to 0.3 percent from 0.5 percent in an evenly split decision on Oct. 31. Shirakawa cast the deciding vote after four of the eight board members, including Nakamura, dissented. Three wanted to cut the rate to 0.25 percent, and one wanted to leave it unchanged.

Reluctant to Lend

Even as interest rates decline, Nakamura said conditions for borrowing in Japan are becoming tighter as the slowdown prompts banks to scale back lending.

``Given concern over the future of the economy and business performance, banks' lending attitude is becoming cautious and there's a change in monetary conditions that were accommodative,'' he said.

Japanese banks' capital has eroded since the financial crisis increased bad debts and losses on stock-market holdings. Mizuho Financial Group Inc., the country's second-largest bank by revenue, plans to raise about 300 billion yen ($3.2 billion) by selling preferred securities, a person familiar with the matter said today.

Nakamura also said he was concerned that the recent sharp gains in the yen are depleting exporters' earnings.

``The yen has strengthened, especially against the euro, and that's leading to deterioration in profits of exporters,'' he said.

Japan's currency has surged 37 percent versus the euro in the past three months and climbed to a 13-year high of 90.93 against the dollar on Oct. 24. The yen traded at 95.68 per dollar and 119.29 versus the euro at 11:59 a.m. in Tokyo.

Emerging Economies Slowing

Exporters are facing weakening demand as the global slowdown spreads to emerging economies such as China and Russia. That trend may get worse, Nakamura said.

``Growth expectations on the emerging nations, which supported the global economy, are declining, risking further slowing of the U.S. and European economies,'' he said. ``It's getting difficult to see when the overseas economy will regain momentum.''

Evidence that the world's second-largest economy is faltering has grown in the past month as the global crisis deepened. Industrial production tumbled for a third quarter in September. Retail sales dropped for the first time in 14 months and household spending fell for a seventh month.

Japan's economy expanded at a 0.1 percent annual rate last quarter, according to the median estimate of 26 economists, after it shrank in the previous three months. The Cabinet Office will publish the gross domestic product data on Nov. 17.

Central banks around the world are lowering rates to limit the damage from the crisis and prop up their economies. The European Central Bank and the Bank of England cut borrowing costs last week. The U.S. Federal Reserve lowered its benchmark rate to a record-equaling 1 percent last month.

[millionairemind]

From Times OnlineNovember 13, 2008

Japan to offer IMF $100 billion
Leo Lewis, Asia Business Correspondent

Japan is preparing to tap its foreign exchange reserves to the tune of $US100 billion in a massive offer to the International Monetary Fund, government sources have told The Times.

The Japanese offer, which will be unveiled fully tomorrow in Washington, will dramatically increase the IMF's ability to lend to emerging economies savaged by the global financial crisis.

Countries in Eastern Europe have already been forced to accept loans from the IMF, but economists are warning that the risk of meltdown could soon emerge in Asia. Japan is already the second-largest donor to the IMF, and has the world's second-largest stash of foreign reserves - some US$980 billion.

According to local media reports, Japan's prime minister, Taro Aso, will announce the offer at Friday's meeting of the Group of 20 industrialised and emerging nations. One ruling party MP confirmed that Mr Aso was "preparing to demonstrate Japan's commitment to global financial stability through its foreign reserve strength," and that "the ability of the IMF to lend aggressively through this crisis must be a priority."

Although details of the plan have not been widely disclosed throughout the government, it is understood that the reserves - already mostly held in the form of US Treasuries - would be offered as collateral for the IMF as it attempted to raise funds as emergency needs arise.

Japan is proposing to lend about 10 per cent of its reserves to ensure that the IMF is itself able to meet its funding demands. But the loan will need to be structured carefully, said Japanese government sources, so that the facility does not actually lead to a sell-off of US Treasuries in an already unstable market.

JapanThe Japanese government privately hopes that its actions will prompt other nations with hefty foreign reserves to make similar offers to the IMF, though it is likely to stop short of making an explicit demand that others follow suit. China, with even larger reserves than Japan, is viewed as a likely candidate to provide collateral, as well as Middle Eastern oil-producers.

The IMF has about $US200 billion £131billion) in surplus funds but it is scrambling to bolster its finances because it is expected to make several large loans to countries such as Iceland, Serbia and Ukraine.

Japan's large foreign exchange reserves are the result of years of currency intervention by the government to keep the yen down against the dollar and help exporters stay competitive. The reserves grew enormously in 2004 when Japan bought tens of billions of dollars in what eventually became a desperate effort to fight the prevailing market direction.

Although Japan's monetary authorities have not intervened since March 2004, recent comments from the Finance Ministry suggest that the Japan may be preparing to step into the markets again if the yen surges back towards Y90 against the dollar - a level that destroys the profits of the country's major exporters.

[mocca_com]

now we are in a crisis come, how to raise cash without leading to a sellout of US treasuries bill.. US already wanted to raise USD700B and it may do it via issuing US treasuries bill and china may want to raise it USD586B stimulus via selling the exisiting treasury bill.. i think this will be the next thing that shake the world economies.

Japan is proposing to lend about 10 per cent of its reserves to ensure that the IMF is itself able to meet its funding demands. But the loan will need to be structured carefully, said Japanese government sources, so that the facility does not actually lead to a sell-off of US Treasuries in an already unstable market.