I don’t agree with the BoJ’s decision to cut from 0.3% –> 0.1%. The cost of borrowing is not the problem here. In fact, the impetus to cut was at least partially pressure from the MoF, in what amounts to a silly attempt to ease yen-strength. The reaction has been muted, and for now, the USD/JPY isn’t likely to even recover a 90-handle. [Read more →]
Bank of Japan caves in again
December 19th, 2008 · No Comments
→ No CommentsTags: M&A · Monetary policy · Yen
Recession confirmed in Japan — tell us something we don’t know
November 17th, 2008 · No Comments
No need to get excited over the fact that the Japanese economy has now contracted two consecutive quarters (no shooting the messenger). That was largely already factored into equities, thus explaining the severely depressed levels registered of late. However, as The Economist reported in its latest edition, the “Toyota shock” of a sharp decline in expected earnings (-74% fiscal y-o-y) reverberated across Japan, bringing home the realization, to some, that stocks may not be so cheap anymore. So, it may be the case that we are closer to fair value, in spite of a market that pretty much trades at book value. [Read more →]
→ No CommentsTags: Earnings · Economy · Market Summary · Nikkei Futures · Valuation
Individual investors rising through the wreckage in Tokyo
November 9th, 2008 · No Comments
To say that the Japanese are sitting on a lot of cash is an understatement. In fact, with as much as $15T of aggregate “AUM,” they continue to struggle (esp. since the YCT was grounded) to find a way to earn better than next-to-nothing returns, given the nation’s miniaturized monetary policy. Individual investors’ long disregard for domestic equities (they’re not solely to blame) has been a big hindrance in bringing the benchmark Nikkei 225 back to a respectable level (20k remains elusive, but first things first, back to 10k). Don’t despair, however, because the Yamadas and Watanabes are back in action, rising through the wreckage — after the N225 nosedived in October to a 26-year low. [Read more →]
→ No CommentsTags: Sentiment
Japanese stocks set to sink again as reality bites
November 6th, 2008 · No Comments
Prior to yesterday’s 6.5% drop in Tokyo (Nikkei 225 close at 8,899), the N225 had rallied 33% in the prior six sessions to recoup a good chunk of the 37% drop between Oct. 1 and the 26-year low reached Oct. 27 at 7,162. Yesterday I stated the obvious in that Tokyo would sell-off as reality set in post-Obama euphoria, but I made the point that the number of sellers would be limited. In fact, volume and turnover weren’t exactly heavy, although stocks were broadly lower. [Read more →]
→ No CommentsTags: Earnings · Market Summary · Nikkei Futures · Sentiment
Awaiting a sell-off as reality strikes again
November 5th, 2008 · 2 Comments
The benchmark Nikkei 225 has gained 33% in the last six trading sessions since bottoming at a 26-year low at 7,162 on October 27. However, to put the surge in perspective: from the start of October to that bottom, the Nikkei shed an even more impressive 37%. So at a close yesterday of 9,521, the N225 is still nearly 2,000 points from its Oct. 1 close of 11,368, which as I’ve said many times before, is far, far from its 2007 peak levels exceeding 18,000. [Read more →]
→ 2 CommentsTags: Economy · Market Summary · Sentiment
BoJ caves in to pressure; Nikkei profit-taking ahead of 3-day
October 31st, 2008 · No Comments
The Bank of Japan cut rates for the first time in seven years: 0.5% –> 0.3%, which is said to have disappointed the market and thus caused the sell-off in Tokyo (Nikkei 225: -5%; Topix-1: -3.6%). Not quite. The market had already opened lower and traded down throughout the entire session until the BoJ announcement. It’s hard to believe there was genuine disappointment with the BoJ, which in likely, largely trying to ease pressure on the yen, made a shortsighted decision, as the title above states, and caved into market pressures. Ironically, and perhaps linked to the so-called disappointment, the yen appreciated nearly 6 points against the euro and almost a full point against the US$. In summary, Japanese stocks were due for a retreat, after racing up some 26% in the three prior sessions. In addition, Monday is a national holiday (Cultural Day) and thus another reason to take profits. Economic data released earlier in the day showed an interesting dip in unemployment, but a multi-year low in the number of jobs-to-job applicants.
→ No CommentsTags: Market Summary
Nikkei recovery a little much?
October 30th, 2008 · 1 Comment
6.4%, 7.7% and now 10%. Those are the percentage gains for the Nikkei 225 over the past three sessions. Thursday’s gain was the 4th largest ever. Tokyo rallied along with the rest of Asia, including a record setting 12% surge in South Korea. Headlines emphasize Central Bank rate cuts, expectation of a BoJ cut tomorrow and more pension fund buying, as being the key drivers behind another day of strong upside. No doubt stocks had been severely oversold. Problem is, some equally heavy profit-taking likely looms and aside from pension fund buying, bullishness on rate cuts is a rather weak reason to dive back into equities. [Read more →]
→ 1 CommentTags: Market Summary
Nikkei rally sustained by pension fund buying
October 29th, 2008 · No Comments
Stocks surged early and held up nicely in Tokyo, that is, until the start of the afternoon session and profit-taking. However, word on the street is that around 2pm pension fund buying helped recover the earlier highs — in fact, producing the seventh largest percentage gain ever for the N225 (7.7%).
*I had to remove the Clipmarks because it auto-updated the Nikkei 225 chart making it irrelevant to the day’s action. Anyway, here’s one of the day’s headlines: 日経平均は589円高と大幅続伸し高値引け、公的年金買い観測=東京市場・29日後場.
→ No CommentsTags: Market Summary
More detail on impact of cross shareholdings in a bear market
October 29th, 2008 · 1 Comment
See the clip below (re. cross shareholding) from an article discussing Japanese stocks at a 26-year low (as of Monday’s close) in yesterday’s Wall Street Journal. Earlier this week I discussed cross shareholdings in Poisonous cross shareholdings may be helpful in reaching a quicker bottom.
|
→ 1 CommentTags: Shareholder Value · Valuation
Finally, a Nikkei bottom?
October 28th, 2008 · No Comments
After four days of massive hemorrhaging (over 2,100 points lost), the Nikkei 225 bounced back in an afternoon session rally that gained momentum into the close. The N225 gained 6.4% (459 points) to close at 7,621. In early trading it wasn’t clear a positive close would happen — the N225 fell through 7,000 at one point to 6,884.90 (a 26-year low). The broader Topix-1 rose 5% to 784, hurt by heavier exposure to banks, non-bank financials and real estate. Nevertheless, the rally had breadth, as 79% of 1st section issues posted gains and 29 of 33 sectors were positive. A weaker yen was also a big help in at least temporarily relieving concerns of recent yen strength although its last trade against the dollar at 95 is still problematic for the “exporters.”
→ No CommentsTags: Market Summary · Sentiment
