August 8 2016

Week of August 8, 2016

Politics:

Last Monday Emperor Akihito addressed the Japanese nation and expressed his concerns to be not fully able anymore to fulfil all obligations. It was an impressive pre-recorder video message, the second such video message (the first was days after the Great East Japan earthquake of March 11, 2011). The word “abdication” was not mentioned in his beautifully worded speech that can be seen here: 天皇陛下お気持ち表明(Message from His Majesty The Emperor). "I am already 80 years old, and fortunately I am now in good health. However, when I consider that my fitness level is gradually declining, I am worried that it may become difficult for me to carry out my duties as the symbol of the State with my whole being as I have done until now.” The English translation is available in this article from NHK; the Financial Times had an analysis of the consequences of a possible abdication by Ian Buruma. More than 80% of the Japanese would support the Emperor’s wishes, according to a poll by The Japan Times.
Ms. Yukiko Koike, the newly elected Governor of Tokyo, had an interview with Foreign Policy some months ago and she mentioned the low participation of women in Japanese politics (in companies no substantial participation either, RM). "Koike is one of the loudest voices in Japan calling for greater female participation in politics and the workforce. Her activism at times seems to have been born out of necessity, and she has criticised the idea that female politicians should be relegated to dealing with women’s issues. But upon entering politics in 1992, Koike found that no one was taking female empowerment seriously as a policy issue. So she helped lead the charge by getting the vote out to women and trying to integrate them into the labor force.” "As a woman in Japanese politics, the new Tokyo governor has had plenty to fight for. According to data compiled by the Inter-Parliamentary Union, a global organisation for legislatures, Japan ranks 155 out of 193 countries in terms of female representation in parliament - worse than Saudi Arabia. There has been little progress since Japanese women earned the right to vote 70 years ago. In 1946, women held 8.4 percent of seats in the House of Representatives, Japan’s lower house. As of this July, they held 9.5 percent of lower house seats, an increase of just over 1 percent.”
Last December the Japanese and the South Korean governments reached an agreement about the long-standing subject of Comfort Women. A foundation has been created and the Japanese government is to pay JPY 1 bln (Apr. EUR 9 mln) to this foundation - payment is close to being released, reports the Asahi Shimbun. It is a thorny issue, also as both countries are facing a very assertive China as well as a unpredictable ruler in Pyongyang and have many common interests.

Economy:

Politico stated that the White House is serious about getting Obama’s legacy trade deal - the biggest in U.S. history - passed by the end of the year, as he has vowed to do despite the misgivings of Republican leaders and the outright opposition of a majority of Democrats in Congress. The USA, Japan and 10 other countries around the Pacific signed the agreement last year and it is now to be approved by the American Senate and House. Benefits for Japan - and the USA - are plenty. See also https://ustr.gov/tpp/
Many Japanese and non-Japanese economists have doubts about the statistical data on the Japanese economy provided by the Japanese Cabinet Office. Now it seems that also the Bank of Japan has data that differ from those provided by the government and the BOJ claims that Japan’s economy did not contract in 2014 but actually grew. The Japanese government looks to expenditures, while the BOJ looks to income. The BOJ report estimates Japan’s economy was JPY 29.5 trillion (USD 291 billion) bigger in 2014 than the official data show. "It is true that Japan’s GDP data is problematic, and I’m hugely in favour of any effort to accurately measure it," said Taro Saito, director of economic research at NLI Research Institute. "I doubted whether the growth rate in fiscal 2014 was as bad as the data showed, although I don’t know if it’s as high as this estimate from the BOJ.” (Bloomberg).
Why Japanese stocks may at least get some love, writes the Financial Times. Japanese equities are yielding more than US equities, and they are attracting attention from those hunting for yield. Corporate governance at listed companies is improving, and "quality income” investing - the conservative strategy of buying companies with strong balance sheets and consistent profits that reliably pay an income - is working well in Japan. According to Société Générale, “quality income” stocks in Japan have comfortably beaten the main Japanese index since the crisis, even as their yield has increased. Thanks to the longstanding corporate Japanese habit of sitting on cash, those dividends remain well protected.

Corporate:

A Nikkei article on acquisitions by Chinese companies of foreign companies and one about acquisitions by Japanese companies. Announced overseas mergers and acquisitions by Chinese companies in the January-June period, including deals still being negotiated, more than doubled on the year to USD 122.57 billion, data from Thomson Reuters shows. This first-half figure exceeds the total for all of 2015, which was itself a record year. Full-year 2016 deals could top USD 200 billion. China accounted for 20.7% of global cross-border deal value, more than any other country including Germany at 18% and the U.S. with 12%. Where are Japanese companies in terms of acquisitions? In the first seven months of 2016, Japanese companies lavished JPY 5.91 trillion yen (USD 58 billion) on overseas acquisitions, according to merger and acquisition consultancy Recof. This year's spending has already surpassed the figures for all of 2013 and 2014.
Japanese corporations are focusing more on expanding research and development capabilities at home than abroad in fiscal 2016, writes the Nikkei, and in some cases overseas R&D centers are closed down with the R&D activities to be moved to Japan. Roughly one in four companies of the Japanese companies responding to the Nikkei survey, have plans to build or expand R&D facilities in Japan this fiscal year or later, five points more than those having similar plans abroad.
Japanese banks have a tough time, according to the Financial Times. Main reason: negative interest rates, resulting in a profit loss of no less that JPY 300 bln, or EUR 2.7 bln. A survey by the Financial Services Agency focused on how negative interest rates impact interest income, derivatives trading, and such retail transactions as sales of asset management products at the three megabanks. Mitsubishi UFJ Financial Group's profit will fall by JPY 155 billion, Sumitomo Mitsui Financial Group will lose between JPY 75 billion and JPY 76 billion in black ink, and Mizuho Financial Group's profit will retreat by JPY 61 billion, the results showed.

Society:

This year’s August 11 had a novelty: it was Japan’s first Mountain Day - and it was celebrated as an official national holiday, according to Deutsche Welle. Japan has now 16 official national holidays and it ranks among the top in the world when it comes to such “free and paid” days. Dai-Ichi Life Research Institute in Tokyo, told Bloomberg that the new national holiday, coupled with Obon, will contribute about JPY 820 billion (USD 8 billion) in spending across the tourism, leisure, hospitality, transportation and retail industries (Deutsche Welle). My suggestion: lets have a “Polder Day” in The Netherlands.
Long read for Nintendo aficionados from Motherboard. Nintendo Power changed the face of how North American gaming publications presented themselves, forcing other game magazines to scramble to adapt to Nintendo Power’s ways of presenting things in order to compete. So how did Nintendo Power transform the landscape of North American game magazines so drastically? The answer is a bit surprising - it took its influence directly from overseas.
The Japanese judo team returns home with no less that 12 medals, an all-time high. The Japanese men's judo team won medals in all the seven categories for the first time since the current weight category system was introduced from the 1988 Seoul Olympics. Five women judoka also won medals and the 12 total won was the most for Japan ever. Japan ranks #5 in terms of total medal count, The Netherlands #12.