Active Investing in Japan

Bloomberg reports today: “An advisory panel may urge the government to relax rules that separate banks and brokerages, the Nikkei newspaper reported. The Financial System Council will announce today that it will study the issue and seek to have its conclusions incorporated into the government’s reform framework for 2007 to be released by June, the report said.”

It mentions, ” Japan is the only industrialized nation that makes a clear distinction between them.”

Now the good stuff: “The possible change may prompt small brokerages to search for buyers of themselves to survive while leading players like Nomura look for more capital tie-ups. The move may increase takeover speculation in the market.” [Bloomberg]

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For a better understanding of what transpired, read this Reuters quote of a strategist at Daiwa Securities: “The problem is that no one thinks that the Nikkei would hit 18,000 in the near future because of uncertainties in the U.S. economy. Earnings forecasts from Japanese companies will be conservative and unlikely to support the market either. Naturally, investors want to sell whenever they get an opportunity to do so.”

A senior strategist at Toyota Asset Management comments: “A cheap yen and others tell you that the business environment looks favourable to corporate earnings, but investors are not confident because companies are cautious.” [Reuters]

Keep reading for today’s market data.

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