Japan 01 (May 08 - Dec 09)

[millionairemind]

Japan mortgage exposure seen over $95 billion
Nikkei: combined total of private-sector financial firms topped Y10 trln
By MarketWatch
Last update: 6:15 p.m. EDT July 16, 2008Comments: 12SAN FRANCISCO

(MarketWatch) -- Japan's private-sector financial institutions held slightly more than 10 trillion yen ($95 billion) in debt securities issued by U.S. mortgage lenders such as Fannie Mae and Freddie Mac as of the end of the fiscal year in March, according to a published report.

Both the government and the private sector have positioned the debt of U.S. mortgage firms as their core investment vehicles because of the entities' high credit ratings and yields higher than those of Treasuries, the business daily Nikkei reported Thursday on its Website.

For now, Japanese financial institutions are not in a rush to unload them on the view that there is little risk of those products plunging in value, thanks to the effective guarantee by the U.S. government, Nikkei said.

The U.S. Treasury Department and the Federal Reserve moved jointly Sunday to back up Freddie Mac and Fannie Mae, announcing a plan to ensure the giant mortgage buyers have the capital they need to survive the continuing U.S. housing crash and other financial-market turmoil.

Major Japanese banks hold roughly 5.6 trillion yen in debt securities issued by U.S. mortgage companies like Fannie and Freddie, Nikkei said.

Shinkin Central Bank had 714 billion yen, while Norinchukin Bank had "several trillion yen" in exposure, the newspaper reported.

Four major life insurers, including Nippon Life Insurance Co., had a combined 4 trillion yen in such holdings, it said.
Many publicly offered investment trusts invest in debt securities issued or guaranteed by U.S. mortgage financiers and these firms' shares.
Mitsubishi UFJ Asset Management Co. said Wednesday that it has 16 funds that invest in such bonds and 19 funds that invest in shares of U.S. mortgage companies. These bonds account for about 68% of its U.S. Dollar Open Fund, according to the Nikkei report.
Mizuho Asset Management Co. has seven funds that incorporate bonds issued by U.S. mortgage firms and six funds that invest in their stocks. Such bonds account for 1.45% of its U.S. Large Cap Value Open Fund.
Japan's Ministry of Finance has not disclosed the extent of the government's exposure, saying that doing so would affect the market.
The Government Pension Investment Fund had 9.6 trillion yen in foreign bonds as of March 31. About 20% of these holdings are asset-backed securities, with debt issued by U.S. mortgage companies accounting for the majority.
Japan Post Bank and Japan Post Insurance Co. appear to have little exposure to these firms, Nikkei said.

[kennynah]

never ending retributions...

**********
Japan's Nationwide Dept. Store Sales Continue To Fall In June
7/18/2008 2:06 AM ET

(RTTNews) - Japan's nationwide department store sales continued to decline for the fourth straight month in June as households reduced their spending.

According to data released by the Japan Department Stores Association, department store sales declined 7.6% year-on-year in June, significantly faster than a 2.7% fall seen in May.

Sales at Tokyo's 28 major department stores plunged 7.4% in the month, following a 2.3% decrease in the month before.

The association said in its report that adverse weather conditions hurt sales of summer-related products, especially clothing.

[millionairemind]

Japan's Exports Fall for First Time in Four Years (Update1)
By Jason Clenfield

July 24 (Bloomberg) -- Japan's exports unexpectedly fell for the first time in more than four years in June, led by a drop in demand from the U.S. and Europe.

Exports declined 1.7 percent from a year earlier, the Finance Ministry said today in Tokyo. The median estimate of 20 economists surveyed by Bloomberg News was for a 3.3 percent gain. It was the first time shipments abroad fell since November 2003.

The world's second-largest economy probably shrank last quarter as the U.S. slowdown and record oil prices took a toll on global demand for Japanese cars and cameras. The Bank of Japan last week cut its economic growth forecast and said the expansion will cool further as higher commodity prices weaken spending by consumers and companies.

``We expect real gross domestic product growth to contract, albeit modestly, in the second quarter,'' said Hiroshi Shiraishi, an economist at Lehman Brothers in Tokyo.

Imports rose 16.2 percent, the fastest pace in 11 months, as crude oil climbed to a record. That caused the trade surplus to shrink 88.9 percent to 138.6 billion yen ($1.3 billion). Economists predicted a surplus of 500 billion yen.
The yen traded at 107.92 per dollar at 9:09 a.m. in Tokyo from 107.93 before the report was published.

Shipments to the U.S., where consumer confidence is close to the worst level since 1980, dropped for a 10th month in June and exports to Europe fell for a second month, the ministry said.

Toyota's Sales

Toyota Motor Corp.'s first-half sales fell 7 percent in North America and Europe and sales growth in China was less than the company projected, the Nikkei newspaper said yesterday. According to a separate report by the Bangkok Post, Toyota is forecasting a drop in Thai truck sales this year for the first time in a decade.

Slowing demand pushed sentiment among Japan's largest manufacturers to a four-year low in June and companies said they expect earnings to decline for the first time since 2001, leaving them with less to spend on factories and hiring.

Still, sales to Asia, led by China, have cushioned the effect of the U.S. slowdown. Shipments to oil-rich and commodity producing countries have also buoyed growth.

``As much as anything else, China's growth is the reason why the global economy has been able to skirt recession,'' said David Cohen, director of Asian Forecasting at Action Economics in Singapore.

Komatsu Ltd., Japan's largest maker of earthmovers, had record profit in the three months ended June 30 because of sales to China and other emerging markets, the Nikkei said this month.

[millionairemind]

Nomura Has Unexpected Loss on Provisions, Trading (Update1)
By Takahiko Hyuga and Shingo Kawamoto

July 29 (Bloomberg) -- Nomura Holdings Inc., Japan's largest brokerage, posted an unexpected first-quarter loss as trading profit slumped and it recorded additional provisions for bond insurers.

The net loss of 76.6 billion yen ($713 million) for the three months ended June 30 compared with a profit of 75.9 billion yen a year earlier. The median estimate among five analysts surveyed by Bloomberg News was for net income of 30 billion yen.

Since Chief Executive Officer Kenichi Watanabe, 55, took the helm in April, profits from trading and underwriting sales of stocks and bonds have dried up as the global credit crisis deepened. Nomura, which failed to increase profit for the seventh time in eight quarters, aims to quadruple annual revenue from Asia outside Japan to 100 billion yen in five years.

``Nomura knows it won't go anywhere this year because of the aftermath of the U.S. subprime loan crisis, and it's waiting for the shakeout to run its course,'' said Azuma Ohno, a Tokyo- based analyst at Credit Suisse Group. ``Going to Asian emerging markets is a prescribed course.''

Credit provisions against so-called monoline insurers led to losses of 63.1 billion yen, Nomura said in a statement today, adding that it's ``almost finished'' with such provisions. Trading profit tumbled almost 90 percent to 10.5 billion yen.

The announcement was made after markets closed. Nomura fell 2.9 percent to 1,543 yen in Tokyo trading today.

Subprime Losses

Nomura had a record quarterly loss of 153.9 billion yen in the three months ended March 31, after putting about 132 billion yen in reserves in case bond insurers can't cover losses on securities. The stock has declined 19 percent in Tokyo trading this year, compared with a 16 percent drop in the 18-company Topix index of securities firms.

The company lost business from Japanese asset managers after a former employee in its mergers and acquisitions department was arrested in April on insider trading charges. The Government Pension Investment Fund, manager of more than $1 trillion of retirement assets, was among customers that suspended bond-trading orders through Nomura.

Nomura has reported about $2.4 billion in subprime-related credit losses and writedowns, compared with more than $54 billion at Citigroup Inc. and $38.2 billion at UBS AG, according to data compiled by Bloomberg.

The Japanese firm stopped buying U.S. subprime mortgage loans and repackaging them as securities after losing 31.2 billion yen on the business in the quarter ended June 2007. It said the following month it would shut its U.S. residential mortgage business after defaults caused a 73 billion yen loss at the unit.

Stock Sales, IPOs

Nomura underwrote three share sales totaling 80.5 billion yen in the quarter ended June 30, down from 19 deals valued at 301.3 billion yen a year earlier, according to data compiled by Bloomberg. It arranged 34 bond sales totaling 528.6 billion yen, down from 50 transactions totaling 576.1 billion yen, Bloomberg data show.

The firm ranked as the top adviser for Japanese mergers and acquisitions during the three-month period, working on deals valued at about $11 billion in total, up from $8 billion a year earlier, according to Bloomberg data.

[kennynah]

Japanese June Auto Production Continues To Grow
7/30/2008 12:58 AM ET

(RTTNews) - Japanese auto production increased 4.5% in June from the previous year, the Japan Automobile Manufacturers Association, or JAMA, revealed Wednesday. In May, vehicle production posted 6.8% annual growth. Automobile production in June totaled 1.03 million units versus 990,114 units recorded in the prior year. Meanwhile, domestic sales dropped 3.3% to 446,990 vehicles.

During the first half of 2008, auto production showed 6% growth on an annual basis. Production rose to 6.05 million units from 5.71 million units produced in the first half of 2007.

[winston]

Japanese small business confidence hits six-year low

Confidence among Japan's small and midsized companies fell to the lowest level in six years as higher energy prices eroded profits.

Shoko Chukin Bank's index of sentiment dropped for a fourth month to 39.9 points in July from 40.7, according to the state-owned lender's monthly survey of 1,000 companies. A number below 50 means pessimists outnumber optimists.

Wholesale inflation at a 27-year high is squeezing profits at small companies, which employ 70 percent of Japan's workers.

Slimmer profit margins give companies less room to raise wages and hire workers, clouding the outlook for household consumption in the world's second-largest economy.

BLOOMBERG

[iam802]

Just TOL.

I have been reading reports since last year (at least) citing Japan is 'undervalue' and provides a good entry.

But, up till now, I have hardly see major upside (assuming I put the money in Japan related unit trusts).

Am I the only only feeling that Japan continue to have difficulty growing, and attracting investments?

Not vested in Japan related stuffs.

[millionairemind]

802,

Just my 2 cents worth..

If you buying nikkei index linked fund, pay attention to the exchange rate.. anytime yen strengthens beyond 105, it is going to hurt the predominantly export driven companies listed in N225. I posted in an earlier post on this same thread on impact of exchange rate on earnings.

If you plot YEN/USD over Nikkei, you might see a correlation.. The last time Nikkei hit around 12000 in March, YEN/USD was around 100.

Hope this helps.

Regards,
mm

[iam802]

Thanks MM.

Did not know that. Useful information. Will take note.

[LenaHuat]

I witnessed Nikkei's irrationally exuberant run-up to 38,000 and its calamitous collapse.
Some 20 years later, that's now, it has yet to recover to even 50% of 38,000 That's how ugly it has been.

Some years ago, Citibank, HSBC and several other international banks eagerly opened rep offices in major Japanese cities. They thought the Jap investors were hungry to diversify their investments away from "post-office" savings, Yen bonds and so would lap up global financial products. But they were bitterly disappointed.

For many years, I hve heard so much hype abt a new Japan...........3G phone, LCD technology, nanotechnology etc....but these never materialized.

Conclusion : I gave up on Japan and the Japanese. Not even Oei HongLeong's offer for JapanLand will stir me.