To all: Here are some quotes from this week's Alan Ableson's column in Barron's!
About the "grace" of the investors in Japan
In truth, they also had in common a manifest desire to conceal their visages. Thus, so reported the Times, some of the Yamaichi customers waiting in line wore sunglasses, which, in contrast to their ubiquitous presence in this country, are not in widespread use in Japan. One woman covered her face with a big scarf. And many of the participants in the genteel run on the brokerage house buried their noses in newspapers or otherwise averted their faces from any stray gaze.
What prompted such preternatural modesty, it emerges, was not discomfort at having done business with a failed firm or at openly displaying deep concern for their capital. Instead, they were eager to avoid the embarrassment of having friends, neighbors, even family, learn that they had played the stock market, which, the reporter solemnly noted, is broadly viewed in Japan as "a sort of disreputable casino."
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About Yamaichi's latest and perhaps the last venture!
Last week we noted the touching faith Yamaichi exhibited in its own stock, buying heavily right up to the last gasp and, in the process, helping to kite the stock from 65 yen to over 100 yen. After a brief pause for dissemination, the shares reopened for trading and, as Peter Du Bois notes in his article International Trader column, hit one yen before rallying mightily to two yen. A little post-mortem research discloses that in its frantic efforts to stave off the inevitable for its stock, Yamaichi made an aggregate net purchase of roughly 50 million of its own shares in the final six days before the fall. That's known, in Japan as it is in the U.S., as throwing money down a rat hole.
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Are Jpanese insurance companies next in line?
Andrew Smithers, ....In his latest analysis, he focuses on the parlous state of the country's massive life-insurance industry.
Andrew notes that while the Japanese banks are grabbing the headlines, the life insurers are, if anything, in even worse shape. He questions whether, in the aggregate, their assets exceed their liabilities and he sees a high risk of further bankruptcies.
The failure of Nissan Life, he relates, was a real downer for the whole sector, causing policyholders to cancel existing policies and defer new purchases. In consequence, he believes the industry's assets will shrink in fiscal '97 for the first time in 50 years, and companies will have to sell assets to meet negative cash flow.
If policyholders continue to cash in at recent rates, he warns, the carriers will be forced to sell stock holdings and property, a fire sale that would add significantly to the spiral of asset price declines. And the excessive returns the insurers are offering on pension assets, he comments, are reducing the short-term risk of cash withdrawals, at the expense of increasing the long-term risk of bankruptcy.
Andrew says that hope for the industry rests on inflation, economic recovery and a buoyant stock market, and these, in turn, depend on a weak yen. Which is not the least of the reasons we're persuaded that, despite the frowns of Uncle Sam and the likely nasty impact on reeling Asian economies, a weak yen is what we'll get. |
