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Japan Economy Forum

TOKYO—Japanese stocks rose to a 15-year high Thursday, as investors take a renewed interest in companies that have shifted their focus back to growth and efficiency.

The Nikkei Stock Average gained 0.4% to 18264.79, the highest since May 2000.

There are signs that Japanese companies, ranging from Canon Inc. to Sony Corp. , are starting to tap into their large cash piles, reinforcing their core businesses and buying out firms for expansion. These companies finally seem to be leaving behind the uncertainty that followed the 2008 global financial crisis, and the aftermath of the March 2011 earthquake, tsunami, and nuclear disasters.

“We are finding a lot more growth opportunities (in Japan) -- good companies that are executing well in this environment,” said Nick Niziolek, who co-manages an $800 million international growth fund at Illinois-based Calamos Investments LLC. The fund, which had very little exposure to Japan for years, turned overweight on Japan in October for the first time since 2007, Mr. Niziolek said.

Domestic firms are also getting a tailwind from Prime Minister Shinzo Abe ’s economic policies, which have weakened the yen and generated mild inflation. The yen has lost about a third of its value since late 2012 when Mr. Abe started campaigning for the nation’s leadership.

Notable blue chips rose to multiyear highs Thursday. Toyota Motor Corp. hit an eight-year high. Industrial robot-maker Fanuc Corp. climbed to a record high.

How far the rally will go is unclear. From late 1998 to early 2000, Japanese stocks soared as the U.S. dot-com bubble reached Japanese shores, but then crashed when the bubble burst. From 2005 to 2007, the prospect of greater demand from fast-growing economies like China lifted Japanese stocks, especially resources-related ones, until Japan was engulfed by the global financial crisis.

Questions remain over the longer-term viability of the Japanese equity market. The shrinking and aging population is a risk to economic growth. The government’s precarious debt situation is keeping some investors away from Japan. The evidence for a broad economic recovery throughout the country hasn’t been persuasive.

While trust banks that manage money for pension funds emerged as the big force last year, buying ¥2.8 trillion ($24 billion) of Japanese stocks, purchases from foreigners subsided to ¥853 billion, according to the Tokyo Stock Exchange. Retail investors were big sellers, unloading ¥3.6 trillion of Japanese stocks.

Still, some investors said what is happening is reminiscent of the U.S. in the 1980s, when conservative management with heavy balance sheets shifted their focus to shareholder returns.

Earlier in February, cash-rich Canon announced it will buy Axis AB, a Swedish network video solutions provider, for around $2.8 billion. Electronics and entertainment giant Sony said Wednesday it would spin off its audio and video units to focus on entertainment and image-sensor businesses. Fanuc said Monday it would invest more than $1 billion in new factories and research facilities at home.

Since late 2012, Sony shares have nearly quadrupled. Canon shares have gained 56%.

“Japanese companies now are much more aware of global competition, are much more aware of giving shareholders better returns,” said Richard Whittall, who is based in Singapore and manages a Japan-focused fund at Alltus Capital of the U.K. “At the micro level, many big changes are taking place,” he said, with Japanese companies “much more pragmatic” about doing share buybacks and mergers and acquisitions.

Chicago-based portfolio manager Drew Edwards at Advisory Research, with about $600 million invested in Japanese equities, said some companies had started using capital more effectively even before the start of “Abenomics” two years ago. But the prime minister’s policies gave them a push by putting a priority on corporate governance to encourage better use of cash. “Hats off to the Abe administration,” Mr. Edwards said. Japan is Overweight in Advisory Research’s global portfolios.

Valuations on Japanese stocks have been rising, but not to the heights of the tech bubble of early 2000. And returns are decent. At the end of March 2000, shares of SoftBank Corp. , one of the best performing stocks at the time, were trading at 414 times the previous 12 months of earnings, according to S&P Capital IQ. Shares of a current top performer, Japan Airport Terminal Co. , traded at 77 times earnings at the end of 2014.

Japanese stocks returned 9.8% in 2014, compared with a 10.4% return for developed markets overall assuming dividends fully reinvested, according to MSCI Inc. ’s world index for developed markets.

Alltus’s Mr. Whittall said a long/short fund he manages has invested in Syuppin Co., an online retailer for second-hand cameras and watches, which will likely benefit from growing e-commerce. The outlook for regional retailers worries him, however, as online shopping spreads and local populations age and shrink.

Yet Robert Sharpe, who manages a $30 million international value fund at Milwaukee-based Heartland Advisors, said there are plenty of opportunities in Japan.

“It’s just that we need to go out and find them,” he said, citing Takamatsu Construction Group Co. , which has been using its cash pile for acquisitions.


Japan Stocks Hit 15-Year High - WSJ
 
:yahoo::yahoo::yahoo:

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(Reuters) - Japan's annual exports in January jumped the most since late 2013 in an encouraging sign a weak yen is finally boosting the nation’s all-important export engine and helping the economy crawl out of recession.

The 17.0 percent year-on-year gain in exports marked the fifth straight month of increase, supported by shipments of cars to the United States and of electronics parts to Asia, data by the Ministry of Finance showed.

Ministry officials say exports are on a firm footing, adding that special factors helped boost shipments such as a rebound from last year's Chinese New Year holidays which fell in January, and extreme cold weather which hit the U.S. economy a year ago.

A pickup in shipments - which had been a soft spot in the economy - is welcome news for policymakers who hope exports will offset still-weak private consumption, and cheaper oil prices will spur firms to spend more on wages and investment, generating a virtuous growth cycle.

And with the economy recovering at a subdued pace after slipping into recession last year, stronger exports growth would let the central bank hold off on any additional stimulus.

Bank of Japan Governor Haruhiko Kuroda said on Wednesday he saw no need now to expand monetary stimulus as the bank raised its view on output and exports and stuck to its assessment that the world's third largest economy is recovering moderately.

"The BOJ will wait to see how oil prices may impact people's deflationary mindset, and brisk trade data will encourage Kuroda to stand pat on policy for the time being," said Takeshi Minami, chief economist at Norinchukin Research Institute.

A jump in export volume suggests that Japanese exporters who have gained hefty profits due to a weak yen are lowering exporting prices to boost shipments, Minami added.

Nissan Motor Co is trying to boost car exports from Japan to benefit from the weaker yen. Honda Motor Co, which has virtually no exports from Japan now, aims to ship abroad about 10-20 percent of its cars built at home.

January exports topped a 11.9 percent annual gain expected by economists in a Reuters poll, following a 12.8 percent rise in December.

Export volume grew 11.2 percent, the fastest gain since December 2010.

Imports fell 9.0 percent in the year to January, due to slumping oil prices, narrowing the trade deficit to 1.18 trillion yen ($9.94 billion), but still a record run of shortfalls stretching 31 months.

Exports to the United States rose 16.5 percent on-year in January, while those to Asia, which account for more than half of Japanese exports, grew 22.7 percent, driven by a rush in demand before the Chinese New Year holidays.


Japan's annual exports jump most since late 2013 in boost to economy| Reuters
 
@Nihonjin1051 when is Abe finally going to bring Japan an independent foreign policy? If the economy is looking good, go for it


Japan is rising again!

Just last quarter, Japanese GDP rose 2.2% , this quarter's growth is strong as well, production is up !

He he he he!

“Japanese companies now are much more aware of global competition, are much more aware of giving shareholders better returns,” said Richard Whittall, who is based in Singapore and manages a Japan-focused fund at Alltus Capital of the U.K. “At the micro level, many big changes are taking place,” he said, with Japanese companies “much more pragmatic” about doing share buybacks and mergers and acquisitions.

Great to see these structural changes ! ;)
 
Japanese Investment Up in China: MOC

2015-02-17 11:27:54
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Shen Danyang, the Spokesperson of the Ministry of Commence is pictured during a press conference where he addresses to the media that China will introduce new plans to stimulate export before the National Day holiday in Beijing, China, 19 September 2012. [Photo: Imagine China]


China's Ministry of Commerce says Japanese investment into the country is still rising, despite recent moves by a number of Japanese companies to close their operations in China.

Newly registered Japanese businesses in China edged up 3.5 percent in January from a year earlier.

Japanese contractual investment shot up close to 47 percent last month.

Actual investment has increased 3.2 percent.


Commerce Ministry spokesperson Shen Danyang.

"Indeed, some Japanese companies have closed their plants in China, but the number is still limited. When implementing their globalization strategies, certain multinationals will undertake measures, such as merger or reorganization to adjust their business layout across the world. This is normal business activity."

A number of Japanese companies, including Panasonic, Toshiba and Citizen, have shut down some of their operations in China.

A weaker yen, on top of rising wages in China, is said to be the main reason behind the move.

Still, Japan remains among the top 10 countries investing in China.

@Nihonjin1051
 
The Japanese stock market is higher on Monday, extending gains from the previous session amid optimism about the outlook for the Japanese economy.

In late-morning trades, the benchmark Nikkei index is adding 56.56 points or 0.29 percent to 19,310.81, after rising to 19,349.20 earlier.

Japanese shares extended gains to close higher on Friday, with the benchmark Nikkei average closing above 19,000 for the first time since April 2000.


Read more: Japanese Market Advances - NASDAQ.com

Fitness craze gripping Japan? No, just a better economy - See more at: Fitness craze gripping Japan? No, just a better economy - Economy News & Top Stories - The Straits Times
 
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Japanese exports rose more than forecast in February, supporting the nation’s emergence from a recession last year.

The value of overseas shipments rose 2.4 percent from a year earlier, the finance ministry said Wednesday, compared with a median estimate for a 0.3 percent increase. Imports declined 3.6 percent, leaving a 424.6 billion yen ($3.5 billion) trade deficit.

Exports are a growing bright spot in an economy that’s still struggling with weak spending by consumers and businesses. Falling oil prices are helping shrink the deficit, which swelled after Japan increased fossil-fuel purchases from abroad after the Fukushima disaster in 2011.

“We still think that external demand will lead economic growth this year,” Hiroshi Watanabe, an economist at SMBC Nikko Securities Inc., said before the data was released.

Shipments of motor vehicles, electrical parts such as semiconductors and metal-working machines contributed to gains in February. Exports to the U.S. rose 14 percent from a year ago while sales to China dropped 17 percent.

The drop in oil prices is benefiting Japan’s energy importers, with the price of brent crude down about 53 percent since a peak in June last year.

Gross domestic product expanded an annualized 1.5 percent in the three months through December from the previous quarter, after shrinking for two quarters.

From Japan’s Exports Rise More Than Forecast, Supporting Recovery - Bloomberg Business
 
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