Henry, I think you will get your money`s worth with this new sub-topic on the Japanese economy... By the way , there is a Japan thread on SI already.
Now to Paul. First off, I must say I respect your opinion and have found your contribution on this thread very worthwhile reading, The fact that I am about to disagree with you vehemently should only be taken as an attempt at reaching useful conclusions or at least insights into the issues at hand...
>>>think the Japanese recovery is for real. Whether or not the economic numbers are great or consistant is
irrelevant. The most important thing is that there is a recovery in sentiment. <<
Paul, I think that the Japanese economy is not recovering at all and if it weren`t for the MASSIVE public spending that has been happening for almost 6 or 7 years if I am correct, it would have been counted out a while ago. We are talking obscene spending here . I live here and see it everyday, and while what I can contribute is mostly in the form of anecdotal evidence, when enough seems to corroborate my views , it has to be given at least some credencence. Besides, what else can I use to make up my opinion? Gov stats I suspect are at least as "funny" as their US counterparts, the financial press has now had its DNA altered to always put a slight bullish tint on even the worst bearish news. I may wander off topic a bit at times, but please stay with me a bit longer. Just two days ago the GDP numbers came out; what happened: contraction. Despite massive cash thrown out the windows. How was it reported? Nikkei bought (up) on weaker yen (it was slightly down, about one yen, to 102.8 I think) BECAUSE the GDP number was negative. Just a little while back, the NIkkei was being touted (bought) as the GDP numbers were supposed to be positive, a proof for the case that the economy is recovering, therefore Japanese stocks should go up... Spinning.
>>> Sentiment can change on a dime, so the recovery is fragile - but it is also real. Optimism is real. Asian recovery
is real. <<
Sentiment has indeed stabilized, I think, even a bit positive. Hey, life is still good here, when everything is added up, so yes it has stabilised a bit. Can comment on the Asian recovery though, although I posted something on the MDA thread taken from an article in which the HKG airport cargo managers for Cathay were saying they had never been as busy as now, shipping to the States because of the strong economy THERE. I think the USA are very much keeping Asia afloat right now. Recovery I don`t know, perhaps someone based in SE Asia could comment.
>>>The strength of the yen is real and is a huge positive, IMO. And the technicals are very favorable.<<<
Why is it a huge positive? The MOF and BOJ don`t seem to think so. There is no denying that someone who bought a year ago into the Nikkei has tremendous gains today, especially throwing in the exchange gains...
>>> Also,
the market is pricing in the fact that much of the trillions of yen in 10 year bonds held in postal savings
accounts that will mature in the coming year will wind up being reinvested in stocks. <<
I see two dangers with this assumption:
1- The people putting money into the Postal system did it for two reasons. Remember that it was being invested there 10 years ago, at 10% (or probably a bit less) but at that time Japan was on the verge of conquering the world economically... the bull market run had given handsome returns ... and you could get RICH buying land (speculating really, as golf memberships were also thought of a way to buy into real estate), SOOO why would someone put money in a drab, unexciting account that paid 10% (or less)? Because for the most part it appealed to them as they were most likely conservative investors to begin with. Partly my theory but I must conceed I was also discussing the various scenarios for the Postal deposits in the coming year with a friend at Daiwa Securities, and their strategy was to try to steer as much money from those account as possible (understandable) but not into stocks, rather into JGBs or bond portfolios. Nevertheless, tehy didn`t expect more than 10% would be sent to stocks, huge amount you might say though... This one, just like Y2K is an unknown quantity to say the least... Obviously if the market happens to be going up at that point , more people might be tempted to pile in. Just another tangent here though: a year and a half ago, foreign money market funds (deposits in US dollar, UK pound etc at 4.5% interest to 6%) were being pushed aggressively as safe vehicles to get more bang for you yen (on which you could only get maybe .5% on a Teiki, one year CD)... The yen was around 130- 147 then... Dont see many of those posters at Nomura and Daiwa lately... For more aggressive investors they were pushing Fidelity and other mutual funds. There you might have done better but considering you bought say at 130 to the usd and are now at 102, the gains arent so wonderful afterall...
2- markets don`t like disappointments...
>>>An important technicalaspect is that the Dow and Nikkei have historically moved inversely, and it is very easy to believe that a top is
in on the Dow while the Nikkei is in the infancy of a new bull market.<<
We may agree somewhat here.
>>> I like mid-cap & large-cap Japanese and Asian techstocks such as 6952, IIJI, TMIC, CTEL and PHI, and banks
such as MBK and HBC. Casio (6952) may be a bottom-fishing play as the weak stock may prosper from the
successful spinoff of its fastest-growing unit. While SNE, NIPNY, MC, KYO, TDK and HIT have all soared
<<<
Correct about the soaring. Disagree on KUB and CAT. I think the equivalent of Cat is Komatsu. Much more into heavy machinery than Kubota. While farm machinery has been hurting (worldwide, New Holland, Deere) heavy construction machinery, thks to the US mostly , has done fine.
>>>
this year, there are still several bellweathers such is 6952 that have not moved up because adequate restructuring
plans have yet to be announced. I am still bearish on KUB, which is more or less the CAT of Japan.
>> no comment on 6952, see above for KUB
>>>
FWIW, should Y2K fears be 100% unfounded, the Jan. rally in Asian markets (and maybe Russia!) should
handsomely trump that of U.S. and Western European markets.
<<
Unknow quantity here, hard to call. Two negatives and one little bit of local news. Japan has shown an appalling dislike for divulging information at all levels, government as well as publicly traded companies. If that is any indicator...
With severe cut backs at especially the old smokestack type cos, the Y2K remediation is thought to have fallen behind or been given low priority...
The small story; My wife was reading to me a news paper article yesterday (i speak the language almost fluently but still find it too much work to read the paper) and the Ministry of Health and Welfare had declared that 2292 health institutions had passed their Y2K guidelines. THen they went on to say that after conducting a survey in Sept and finding out that only 36% of the institutions under its supervision had started work on the bug, it contacted them and told them that basically their names would be published if they didn`t start remediation by the time they would be surveyed again in Nov. (concept of shame, and of course, most smaller institutions are private, for profit hospitals) . So, now, magically, 2292 (of how many the article didn`t say...) are now suppposedly ready, at least in the core areas recommended by the Health Ministry (Emergency dept, IC units and a few others I forgot).
I would have a lot more to post but I have ranted long enough. Maybe my next message should focus on the positives. E-commerce, internet use, restruturing, technology and manufacturing knowhow, work force motivation and competence, available savings etc...
Best regards
Stephan |
