Japan as an airplane

先週聞いた民主党某副大臣が外国人投資家に向けて行った講演。
「日本は飛行機、片翼に財政政策、片翼に金融政策、コックピットに政府、それで飛んでいるのだ」、と説明したところ、外国人投資家から「そんな飛行機は墜落する。それで今日、運航できるのは北朝鮮くらいだろう。片方に投資、もう片方に雇用、政府は調整役でしかないはずだ。」と手厳しい指摘。プロの投資家相手に財政政策とは何ぞやを「橋を作って交易が生まれて・・」と延々ご説明。地元選挙区向けの説明会と勘違いしてしまったのだろうか・・The world's most unloved marketを改めて世に印象付けた形となってしまった。

Alba Partners aligned with Arc Media Inc. (dated 08/20)

Alba Partners is aligned with Arc Media Inc., a New York based global consulting firm. Alba helps Arc's marketing in Japan along with providing on-going client relations to ensure client's satisfaction and deliverables.

Arc Media is not a typical consulting firm. It bridges challenges that clients face over international business matters and its solutions.
Arc Media provides local marketing insights by bringing in its global network of experts, Power MBA (R) Global network.
The company’s services include opinion leader interviews (Experts on Demand), in-depth strategic &market research and entry consulting. Arc Media has worked various projects in the countries including Japan, China, Russia, India, South East Asia, EU, Eastern Europe, Middle East and the United States.
URL:http://www.arcmedia.net/
Please contact us for research samples.

IASB comments on IFRS conversion

There was a seminar at the Security Analysts Association of Japan (SAAJ), having Mr Yamada of IASB as a speaker.
He kindly went through many of the discussions held at International Accounting Standards Board (IASB), regarding the Japanese accounting converging IFRS. One of the impressive part was the push back from Japan in terms of cross-shareholding that not everything will be included as losses/gains in the comprehensive income.
It is hard to comment about this from my stand point, having some foreign investors as clients, and some Japanese companies on the other hand. But from my personal view as a Japanese, I think these are sometimes necessary evil to save the high-end technology in the Japanese companies from short-termed large capital.

Alba to merge NER, CA based company

Here is the news from NER. The partners of Nihon Equity Research (NER), Chako Ando and Bob Schneider, are pleased to announce the merger of our company with Alba Partners, a Tokyo-based equity research firm providing a wide range of analytical and information services on Japanese stocks to overseas investors. The merger is effective June 1, 2009. As Advisors to Alba, we will be actively involved in the firm's research effort. We thank you for your past support and look forward to serving you at our new company. Please click below for Alba's web site to see more details of research work it offers. click here Alba Partners is a Tokyo-based firm that has done over 300 local visits and teleconferences and attended more than 150 analyst meetings for overseas clients. Its menu of services has been much broader than the traditional report-based research product of NER. It includes consultations with the large network of experts they have built up over many years, news monitoring, market research, and "detective" field work. So now, with a strong, on-the-ground research operation in Tokyo, -- especially if the tougher investment environment has you looking at ways to maintain the same level of quality research at reduced cost. If any of this sounds interesting let us know, and we would be happy to discuss specific assignments. Thanks much for your support, Sincerely, --The Team at Nihon Equity Research Bob Schneider and Chako Ando If you no longer wish to receive these emails, please reply to this message with "Unsubscribe" in the subject line or simply click on the following link: Unsubscribe 1363 Hansen Ave. Alameda, CA 94501 Read the VerticalResponse marketing policy. e partners of Nihon Equity Research (NER), Chako Ando and Bob Schneider, are pleased to announce the merger of our company with Alba Partners, a Tokyo-based equity research firm providing a wide range of analytical and information services on Japanese stocks to overseas investors. The merger is effective June 1, 2009. As Advisors to Alba, we will be actively involved in the firm's research effort. We thank you for your past support and look forward to serving you at our new company. Please click below for Alba's web site to see more details of research work it offers. click here Alba Partners is a Tokyo-based firm that has done over 300 local visits and teleconferences and attended more than 150 analyst meetings for overseas clients. Its menu of services has been much broader than the traditional report-based research product of NER. It includes consultations with the large network of experts they have built up over many years, news monitoring, market research, and "detective" field work. So now, with a strong, on-the-ground research operation in Tokyo, -- especially if the tougher investment environment has you looking at ways to maintain the same level of quality research at reduced cost. If any of this sounds interesting let us know, and we would be happy to discuss specific assignments. Thanks much for your support, Sincerely, --The Team at Nihon Equity Research Bob Schneider and Chako Ando

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Hassle of establishing the Consumer Affairs Agency

It is just a month away till the new agency, Consumer Affairs Agency is going to be launched. It was part of the cabinet's pledge to ensure the safety of food, consumer finance, and other products.
The new agency will gather people, operation and regulation from 9 ministries/agencies and 1 committee, adding 29 laws under the control.
The preparation is said to be focusing on areas such as Specified Business Transaction Law and Money Lending Business Law which will be operated jointly with other ministries. It might affect consumer finance industry, credit loans, english and cram schools, again?

Hitachi to wholly own 5 listed subsidiaries

Hitachi plans to increase its holdings in five listed companies, up to 100%, by spending Y300bn on TOB. Five subsidiaries are Hitachi Maxell (6810), Hitachi Plant Tech (1970), Hitachi Info Sys (9741), Hitachi Software Eng (9694) and Hitachi System and Service (3735).
Hitachi reported $8bn net loss in FY3/09, a record for Japanese manufacturer, and is accelerating the group restructuring; but still holds 16 listed subsidiaries (incl. above) of its 943 consolidated companies.

Parent-child listing is a notorious Japanese system, and given the inefficiency under the economic slowdown and some changes they are going to face in the new accounting standards, there might be some other groups to follow Hitachi’s strategy. –A change, not from a corporate governance point of view though..

Biggest challenge, convergence to IFRS

Attending the EFFAS conference, the most impressive subject was the global convergence to the IFRS, or International Financial Reporting Standard.
It was shocking to see the world map with the countries started/starting to report in this criteria colored, leaving out Japan, US and few other countries.

One of the major changes will be the "comprehensive income" instead of net income, adding minority interest, forex adjustment, pension liability, shareholding profits/losses and derivatives profits/losses to the net income. The new approach will be based on B/S items.
According to some reports, if the forex and stock market stays at the current level, some of the large caps such as Toyota, Panasonic and Mitsui could lose it's "income" by Y400-900bn, mainly due to forex matter, while Toyoda Industry could also suffer from shareholding, as an owner of Toyota Motors.

The convergence will take place by June 2011, arbitrary from 2010, and could be mandatory from 2015-2016 for the Japanese companies.
I would like to follow this topic from now on.

Buying back White Elephants to boost economy

A few of leading Japanese retailers started offering "Trade-In" guarantees to encourage new consumption. These are relatively high end consumer goods, such as household appliances, digital cameras, dresses.

By guaranteeing the trade-in, even for broken used goods, the merchants hope to give consumers confidence to purchase new high-end goods.

One study says these trade-ins created an additional two trillion yen consumer market.

For example, a home electronics retailer Big Camera guarantees to buy back 20 items even if they no longer work.

http://www.biccamera.co.jp/shopguide/campaign/teigakushitadori/index.html

Odakyu Dept Store gives a 1000 yen ticket for worn out shoes purchased from the retailer, which then can be applied toward a purchase of a new pair of shoes priced over 5,000 yen.

For more information (in Japanese), see below:
http://www.j-cast.com/2009/04/09039201.html

EFFAS Summer School

Aska will participate in this program from tomorrow, held at Santandar near Madrid.
http://www.saa.or.jp/curriculum/ciia/pdf/EFFAS_SummerSchool09.pdf
If any of you happen to be there, please let me know!
I will be back on 13th Monday.
If you need urgent help from Alba Partners, please contact toko.sakuta@alba-partners.com or chako@alba-partners.com.

Renovations boom, negative impact to general contractors?

New condo sales was 12,180 last month while second hand condos sold 13,340. Japanese people used to prefer living in new houses and condos, but the trend seems to be changing. These old condos are renovated by the real estate developers or sometimes by the buyers. When the developers renovate, some started to issue an “evidence” to proof the safety and cleanliness of the used-houses, which is probably stimulating the demand.
Quite contrary, general contractors, or the Japanese construction companies are suffering a sharp decline in orders for 7 consecutive months. May orders of top 50 general contractors were -41.9% yoy.
If people do not buy new houses/condos and are shifting to the used market, the competitive landscape of the construction industry will change.

NIDEC, to put salaries back to normal

NIDEC's President Nagamori is one my favorite manager in Japan.
He decided to terminate pay cuts of 1300 employees, although gradually, citing the recovery in co’s business. We have seen HDD-related components’ sales getting stronger such as Seagate’s guidance, which may have made NIDEC bullish than before.
I know there was a sell rating initiation on the street today, not related to this staff cost raise I suppose, but I believe that this is one of the best companies in Japan which should recover faster than its peers.

Regression? Less share buybacks and cross-shareholdings.

Yesterday's evening Nikkei reported that many companies are whether reducing or postponing their share buybacks.
Takeda 280bn (FY3/09)=>0(FY3/10), NTT Docomo 137=>0, Astellas 124=>smaller
Panasonic 72=>0, Toyota 70=>0, JR West 20=>0, Murata 15=0
Should be natural under this crisis, but we wish the tide to come back in the near future when the economy normalizes.
Another concern is the rise in cross shareholding ratio. Based on the Toyo Keizai data, the cross shareholding decreased from 1990 through 2005 but started to rise for three consecutive years...

'Tis a Season of Shareholders Meetings - with lots of reduced and foregone dividends

As a majority of Japanese companies have year end in March, June is the peak season of shareholders meetings (called Annual General Meeting or AGM in Japan).

Hit by the recession started from the U.S. sub-prime meltdown, about one in every three Japanese companies announced either reduced or no dividends.

This is in contrast to the last season, when many companies increased dividends while foregoing pay increase for employees. Japan's media was critical of these companies for "giving in to overseas (investors) pressure".

Nissan's shareholders meeting yesterday started with the French CEO, Carlos Ghosn, apologizing to shareholders for the loss of dividends. While lower compared to the US standard, total bonus of 2.5 billion yen (approx. $25 million) to ten directors of Nissan is much higher than an average of listed Japanese companies.

Also, this year the new anti acquisition poison pill was 10% less than last year, with the decline of foreign ownership.

Introduction of Alba Partners

Alba Partners is an independent, unbiased provider of equity research to overseas investors in Japanese stocks. We offer first-rate English-language analysis and information on Japanese companies.

Our services range from financial, political, economic, and regulatory analysis to company access, idea generation, and news monitoring. We provide clients with all the benefits and insights of a Japan-based analyst team in a timely and cost-effective manner.

Alba enables easy entry for investing in Japanese stocks. Our mission is to provide you with all of our experience, knowledge, and local insights to achieve the highest return on your research investment.

Going forward, we will keep you posted with the latest news on the Japanese market. Stay in touch with Alba's "What's new".