February 29 2016

Week of February 29, 2016

Politics:

PM Abe wants to change Japan’s constitution, and in particular Article 9 that reads: The Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as a means of settling international disputes. To realize that change is a hard fight for him, not only to win enough support among his voters, but also in the Upper House where a 2/3 majority is needed. This article in the Yomiuri Shimbun / The Japan News includes a series of statements by Mr Abe on this issue.
Half of Japan’s electorate is unhappy with Abenomics, reported the Nikkei. The cabinet's approval rating held steady at 47%, while disapproval rose 5% from January to 39% (Nikkei). Japanese Prime Minister Shinzo Abe is likely to call a general election this year, as speculation swirls over whether the prime minister will combine a mandated upper house vote with a poll for the lower house. To his advantage: the opposition parties are in disarray.
Japan and the Philippines signed a defense agreement last week. This will significantly boost defense cooperation between the two countries, including a new framework for the supply of military hardware and technology as well as provisions for joint research and development projects. It is Japan’s first agreement with a South-East Asian nation, the only two other countries that Japan has defense pacts with are Australia and the USA (The Diplomat).

Economy:

Japan’s economy is forecast to have shrunk an annualised 1.5% in October-December last year, slightly worse than the early estimate of a 1.4% contraction. Consumer spending and external demand are weak, and an inventory adjustment has continued longer than expected, according to the Japan Research Institute (New York Times).
The effects of the Bank of Japan’s negative interest rates are dripping Example is the performance of Japan Post Bank that went public late last year (shares down by 20%). “Mrs Watanabe”, the exemplary average Japanese that holds some shares, was asked to invest more into equities incl. that of Japan Post bank. She did so, considering the success of Japan Post Bank’s IPO. Mrs Watanabe has savings partly in government bonds and is suffering. The questions is: what is to be done now? The BoJ is urging companies to raise wages in order to fight deflation and find uses for spare corporate cash. "Even this idea seems contradictory”, writes Gillian Tett. "In a world of negative rates, it is hard to see why companies would suddenly feel inspired to raise salaries sharply. Watching government bond yields turn negative has made business leaders more, not less, fearful" (Financial Times).
Blame the Chinese! The contraction of China’s economy results in bankruptcies in Japan: from April 2015 to February 2016, Japan saw 80 bankruptcies caused by such factors as China's slowing economy and higher production costs, with liabilities totalling more than 230 billion yen (USD 1.8 bln), according to Tokyo Shoko Research. The number of cases jumped 70% compared with a year earlier (Nikkei).

Corporate:

The take-over battle of Sharp provides interesting insights in corporate Japan’s relations with its major banks and the government. Taiwanese Foxconn is convinced it will acquire a Sharp and most probably this Monday the deal will be signed and delivered. This article in the Financial Times pictures well this take-over saga.
DUJAT members Canon and FUJIFILM are among the three finalists to acquire Toshiba Medical, the world's second-largest seller of computed-tomography equipment, with annual consolidated sales totalling about 400 billion yen (EUR3.3 bln). It is expected to sell for around 700 billion yen, apr. 25 times EDITDA, quite high (Nikkei).
Who has the thinnest? This is not part of the debate between Trump and Cruz/Rubio, but a serious battle between a Chinese and a Japanese condom maker, Okamoto. A district court in Guangzhou ruled in favour of the complainant and ordered the Japanese maker to pay the amount demanded: the princely sum of 1 yuan (15 cents, Nikkei).

Society:

On March 11 it is five years ago that the Great East Japan Earthquake hit, followed by a tsunami and the fall-out of the Daiichi nuclear reactors at Fukushima. Reuters carried a sad story on Japan’s nuclear refugees. More than 160,000 people were evacuated from towns around the Daiichi nuclear plant. Around 10% still live in temporary housing across Fukushima prefecture. Most have settled outside their hometowns and have begun new lives. In a small town Naraha, two restaurants, a supermarket and a post office, housed in prefabricated shacks, make up the town's main shopping center. The restaurants close at 3 p.m. "No children were in sight at Naraha's main park overlooking the Pacific Ocean on a recent morning. Several elderly residents were at the boardwalk gazing at hundreds of bags stuffed with radioactive waste. In fact, the bags are a common sight around town: in the woods, by the ocean, on abandoned rice fields." Only 440 of Naraha's pre-disaster population 8,042 have returned - nearly 70% of them over 60.
A major question is: what to do with the nuclear waste? Contaminated soil is partly packed in plastic bags. Polluted groundwater is another problem: groundwater flowing into the reactor buildings mixes with radioactive substances. Contaminated water at the plant amounts to an average of 550 tons a day. In order to prevent this water flowing into the ocean, frozen soil shields are to be installed (Yomiuri Shimbun / The Japan News).
In the autumn of 2011 we organised with three colleagues and photography museum Huis Marseille an exhibition on “The abandoned animals in Fukushima” in Amsterdam. One of our team was able to convince Japanese photographer Yasusuke Ota to make his photographs available outside Japan, a first time. Two years later we received a request from the Boston Museum of Fine Arts to have this exhibition in its museum in Boston and now it will run in New York. This picture in Business Insider shows an ostrich in a deserted town close to Fukushima. Ostriches were grown in the region as a symbol of nuclear power: little feed needed for a high energy output. The local ostrich farm was left upon the evacuation in a 20 km zone and the ostriches took control of the town. Sounds bizar, but this is what happened.