Forums / Property Investing / Overseas Deals / Japan (and its Real-Estate market) Rides Again

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  • Profile photo of DubstepDubstep
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    zmagen wrote:
    No, these guys definitely fall under "dead ancestors/samurais". You're lagging behind again, Dub. I'll have to ask you to visit mr Abe's office after class.

    Great, so now on top of all the issues you can face with tenants, in Japan you also have to contend with the dead, and whether your insurance covers you for fire, flood and a miriad of spooks.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    On the upside, though, the live tenants are far better than the dead ones…got one now who's been in the same unit 19 years…another client just settled on one that's been there for 15…average 4.5 per tenant – not too shabby, even if you have to conduct the occasional exorcism when they go.

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of FreckleFreckle
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    Japanese Hodgepodge Of Old Ideas And New Contradictions, Stocks Dive In Sympathy

    And so it went with his master plan, a hodgepodge of vague wishes, strategies, ideas, and contradictions, similar to those made by his predecessors over the last ten years. They too had wanted to overhaul the formidable bureaucracy and introduce competition only to get stymied at every twist and turn. The problem in Japan isn’t unemployment, which is low, or innovation in the private sector, but an unwillingness by everyone to pay for the corporate and individual welfare state, or alternatively, to dismantle it. Hence the horrendous deficits that just keep getting bigger, and the debt that has grown out of control. And any good options to deal with them have long ago evaporated.

    (Full article)

    Couldn't have said it better myself. Now watch the opinion polls.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Kinda like this article…meandering opinion piece, recycling old ideas without actually saying anything new, and certainly nothing concrete. What happened to the graphs? It's been two days already!

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of DubstepDubstep
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    Profile photo of FreckleFreckle
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    zmagen wrote:
    What happened to the graphs? It's been two days already!

    I don't want you suffering from graph burn out. You're also showing signs of graph addiction.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Here are some more of the idiots who have faith in Japan – Soros and GS Give Bass the Three Fingered Salute 

    Quote:
    The man with a history of going against the wind and winning may be rolling his golden dice again: Billionaire investor George Soros is apparently placing bets on Japan, just as the market there dangles over bear territory. His fund, Soros Fund Management, has been shorting the yen and buying up local stocks after seeing signs of stability in the country’s bond market …stocks currently look “very attractive” to the Soros fund because it’s optimistic on Japanese economic data and earnings… the fund is also across-the-board buying shares of Japanese companies, from major blue chips to medium-cap growth shares… The day before, Goldman Sachs said in a strategy note that a one-percentage-point lift in the Japan GPIF’s domestic equity could lead to equity inflows of more than ¥1 trillion yen. In addition, Hiromi Suzuki and other strategists said the re-introduction of tax-exempt Individual Savings Accounts from Jan. 2014 could trigger annual inflows into equities/investment trusts of up to ¥3.5 trillion. In a June 1 note, Goldman said that despite market volatility for Japan stocks, it was bullish for the medium and longer term.

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of FreckleFreckle
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    Soros and GS are both market manipulators big time. I'm interested to know how a market speculator like Soros endorses in any way Abenomics. Soros plays the markets as he sees them. He's very short term in many respects. Soros is there to take advantage of the big volatile moves in the market. Nothing he does help Japan economically or materially. He won't for example make Japanese companies more competitive or grow the export market or lower their debt burden. 

    As for Bass he's been largely correct so far but you should read his views in more depth. He sees the JGB market as vulnerable to swings in BOJ policy and currency manipulation. He simply explains the fundamental problems Japan has and takes a logical view point. He says he doesn't see a crash per se but a correction that will for the most part go unnoticed by many.

    Don't get too fixated with Bass. He has his weak points but he's just one of a growing number of high profile commentators that have Japan on a negative watch.

    Profile photo of FreckleFreckle
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    Richard Koo provides a fairly balanced view of Abenomics in this article. The difficulties facing the Japanese govt and BOJ are immense. So far the results aren't encouraging.

    Richard Koo: "Honeymoon For Abenomics Is Over"

    Only 22% of people surveyed by the Nikkei felt Japan’s economy is actually recovering (27 May 2013), suggesting relatively few have benefited from Abenomics’ honeymoon thus far.

    Moreover, an increase in long-term rates at a time when 78% of the population is not personally experiencing a recovery is most likely a “bad” rise in rates, and the authorities need to address it very carefully, keeping a close eye on private demand for funds.

    Full Article

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Interesting, well balanced view of the situation, and I agree. It's a thin rope and dangerous juggling act, and will need the support of many irrespective variables to succeed. But when wasn't this the case? The volatility and cyclic extremes in global economies is only going to get worse in coming years. Short term players will make bigger fortunes (and lose much more)- but long term players like property investors who hedge their portfolios haven't changed their positions that much, and I don't expect they will in the foreseeable future (I.e the next decade or two), but maybe that's just me.

    .

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
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    Ziv Nakajima-Magen - Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of FreckleFreckle
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    Quote:
    but long term players like property investors who hedge their portfolios haven't changed their positions that much,

    And how have you hedged yours?

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Why, Freckle, darling, I thought you'd never ask >blush< Personally, our "family fortunes" (that's a lot less than it sounds) are spread in various RE (B&M/Notes of various structures/REITs etc) in various countries and continents, with smaller amounts in various interest bearing funds/term deposits etc – also in several currencies world-wide. Nothing too fancy or crazy/risky, although we sometimes take a chance or two with various properties in lower areas and higher yields – but again, smaller parts of the portfolio. The majority are good spots with medium returns. Business generates income, which is channelled into investment, which is diversified, to the best of our limited understanding, as much as we can. No genius here, but reasonable and reliable income, with enough flexibility to make shifts possible, in accordance with global ups and downs, which is how we like to be positioned.

    From what I’ve gathered in conversations with almost all of our new clients in the last year, the profile joining us seems to be very similar.

    We’re now spreading our wings to higher net-worth and institutional client profiles (been mostly smaller family type investors so far, profile similar to my own) – so will be able to tell you about how they’re hedged over the coming year or so.

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of FreckleFreckle
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    Funny I was looking at developing an investment fund based on that kind of model for small investors who can't access the kinds of investment markets the bigger guys get access to. The idea centered around using business structures to cross invest across multiple international markets. Something the individual would find impossible to do. It would spread various risks such as diversifying markets, currency, sovereign (legal, policy etc), bank failures and so on. Core assets would be property both RRE and CRE with cash (term deposit ) PM's and SME direct investments. 

    Then I slapped myself around a bit and told myself I was supposed to be going after the stress free quiet life. Old habits.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Great minds think alike. I'm sure that period will come for me too in a decade or three – my back's been telling me that for a while now (that is, unless they come up with those cool "ghost in the shell" type cradle-type ergonomic workstations, and one small enough to carry around in a suitcase and fit in hotel rooms. Then I'll probably work till I drop).

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
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    Ziv Nakajima-Magen - Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of FreckleFreckle
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    The old girl would have a pink fit if I bought one of those.

    Profile photo of FreckleFreckle
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    And here it comes..

    Japan to adopt 'bail-ins,' force bank losses on investors if needed, Nikkei says

    • Japan's Financial Services Agency will enact new rules that will forced failed bank losses on investors, if needed, via a mechanism known as a "bail-in," according to The Nikkei. Mitsubishi UFJ (MTU), Mizuho Financial (MFG) and Sumitomo Mitsui (SMFG) are among those proposing amendments to allow them to issue the types of preferred shares or subordinated bonds that would be used in such cases, the report noted.

    Looks like the banks are setting up their backstops for when things turn to custard.. that's ominous.

    and Abenomics appears to be in trouble

    The Abenomics effect deflates.

    Abe seems big on rhetoric but small on detail. He's fallen at the first real challenge. Failure to turn this around will doom his term in office if he survives at all. a Long way to go yet but it's not looking too good for old Abe san.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    A wise man once told me not to place too much faith in MSM sensational headlines, but in any case –

    Quote:
    Looks like the banks are setting up their backstops for when things turn to custard.. that's ominous…"

    No?!?! Banks looking after their own interests? IMPOSSIBLE! They're charitable organizations, the lot of them…aren't they???

    Quote:
    …Abenomics appears to be in trouble…

    And from that very same opinion piece –

    Quote:
    …To be sure, the project isn't doomed, and the BOJ and Prime Minister Abe won't soon give up…

    Japan's Economy Grows, Surplus Doubles

    Quote:
    …Japan's economy has grown and its current account surplus doubled in April from a year earlier, in a fresh sign the government's aggressive policies to stimulate growth are paying early dividends. Bank lending in the country also posted its biggest annual rise in over three years…The current account surplus stood at 750 billion yen ($US7.70 billion), up 100.8 per cent from a year earlier and much bigger than a median market forecast of a 320 billion yen surplus…Hefty income gains including returns from Japanese investments abroad, which were boosted by a weak yen, more than made up for trade deficits, analysts say…

    Why the tendency to scream out "the sky is falling" every time someone has an opinion, Freckle? I understand the contrarian approach, but if anything, it seems as if the majority of analysts aren't too thrilled about Japan's prospects – shouldn't your philosophy dictate the opposite approach? ;) Japan's Economy Continues Turnaround

    Quote:
    …gross domestic product rose at a 4.1% annual pace in the first three months of the year. On a quarterly basis, Japan's GDP increased by 1.0%… Abe's government will approve a series of reforms later this month to make labor markets more flexible, encourage immigration, bring nuclear power plants back online and draw more Japanese women into the workforce…

    Wow. Encouraging immigration…incorporating women into the workforce…amazing, it's almost what that delusional bloke from that forum was saying for the past 7 months or so…but no, that can't be. I KNOW all there is to know about the Japanese people and their mentality. No way this'll ever work!!!!! Or will it?…(can't say I'm too thrilled about his pro-nuclear policy though…hope the massive amounts of money Mitsubishi, Nippon Steel, Softbank and the rest of the Japanese giants have already poured into renewable initiatives will pose a strong-enough alternative – time will tell, as usual)

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
    Email Me | Phone Me

    Ziv Nakajima-Magen - Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

    Profile photo of FreckleFreckle
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    Japanese banks aren't the only ones pushing for access to investor and by default depositor funds. Pre GFC it wasn't a concern for the depositor but post GFC and now Cyprus it is. We've moved from govt guarantees to stabilise and support the banking system (prevent runs) to an all in free for all. That's a trend now everywhere (recently in NZ) and it's now a given that anything in a bank deposit account is fair game. This marks a new stage in the over all demise of our current financial system. Sovereigns now recognise they do not have the means to stave off a banking collapse on their own so are giving tacit support to banks to go after anyones coin to prevent collapse. 

    Allowing Japanese banks this latitude signals a lack in confidence at how thing might turn out. It also suggest that despite all the reassurances, the banking system is under far more stress and far more vulnerable than anyone's letting on.  Plan accordingly.

    The Japanese economic growth story is a myth. They've just pumped a gazillion yen into the system and seen a flood of hot money race in to front run the ride to the moon stock market. The time frame to measure growth attributable to anything Abe may have done is way to short to have any credibility. It's part of the govt's media campaign to maintain confidence. It's as much political as it is economic. If you want to believe the superficial feel good stories that's up you. 

    Current Account stories are feel good for the man in the street who doesn't understand them. 

    Here's Australia's. It's been negative for the last 30 years… negative all that time. Who's traveling better and has less debt.

    Terms of Trade is a better indicator because it focuses solely on the cost of exports verses imports.  Japan's for the last 25 years tells a story all its own

    Abe's problem is that nothing he is doing shows any sign of turning this thing around. Quite the contrary. You will get hot spots in the economy and everyone will clap and applaud at what a clever boy he is while the rest of us with a clue know full well this thing is (statistically at this stage) one sick puppy that will in all likelihood die a painful (for many) death.

    If the rest of the worlds economy wasn't a sick joke he might have a chance at shifting the direction of the Japanese economy temporarily but until they tackle the fundamental problem of too much debt and extreme budget deficits things just ain't gonna go well over the long term.

    Profile photo of FreckleFreckle
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    Beware of GDP figures. I don't put much store in them. It's like looking at your top line and ignoring your bottom line. The problem with GDP everywhere is they're all manipulating the bloody thing for political reasons. Joe public assumes GDP growth is a real figure and actually means something. Same BS here in Oz.

    The nuclear thing is a dodgy one. I can't see they've got much choice at the moment. The cost of imported energy is killing them. Heaven help you if another one falls over though. That's all you'll need.

    The women thing is a political stunt. They already have women in the work force. Nothing new there. Problem is they have to overcome the paternalistic culture in business and push more women to the top not just the token ones. The immigration/women thing is a red herring anyway. It'll be decades before they could hope to capatilise on any of those initiatives if at all. The problem is now and the next 5 years. It simply diverts attention and energy from the real problems that need addressing.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Sorry, Freckle…I truly envy the amount of free time you seem to have on your hands…I can only get to this thread about once a week or so. You're right, hot money is flowing into Japan, slowly tapering down to reasonable money. The masses, which move in knee-jerk reactions as usual, a typical behaviour most easily seen in currency and bond markets, as well as in equities, are selling one week and buying the next – but long-term players aren't phased –

    Quote:
    'The Japanese share market will recover, though not straightaway, but in the months ahead', says Shane Oliver of AMP Capital Investors. In an interview to CNBC-TV18 – "Q: There is a complete chaos in the Japanese market at this point. How have you read the developments and would you be nervous? Do you think this will just pass? A: I think this will just pass. The Japanese share market rose 80 percent over six months. Any market that goes up that quickly will have a sharp correction at some point and this is it. Bull markets are often characterised by steady advances and as investors get themselves long, you just need little bit of bad news to cause a sharp correction. But when you look at the Japanese fundamentals, the market doesn't look overvalued to me. It is around fair value. But with the yen having fallen so far and likely to boost earnings over the course of the year, we will see the Japanese share market recovery resume. Not necessarily straightaway, but in the months ahead, Japanese share market will start heading back up again. Q: There has been no recovery in the Nikkei. Currently it is at the low point of the day, it closed down 7.3 percent, biggest fall in two years. Nikkei has run up around 40 percent in the past on a year-to-date basis. For today in particular, what exactly plagued the Nikkei? A: We don't know what everyone else is talking about. But usually when such things happen, you need a slight trigger to cause the market to come down and then people might be trying to take profits. The Japanese share markets are up 40 percent depending at which time horizon, but year to date it was up 40 percent. Over six months, it is up 80 percent. So, many investors would have been thinking well, we do not know if this is a top or not, but it might be wise to take profits. So, there is not a lot of consideration given the fundamentals, though the outlook is just a bit of blind sell off as some investors take profits…"

    Abe's pre-election rhetoric, as well, is slowly trickling down into manageable small chunks, in very Japanese fashion. I know you don't approve, but if he's to have any chance of selling this to the public, voters, and particularly old-skool Japanese "shachos" (CEOs/Presidents and their ilk), that's the only way he'll be able to go about it – Initial Economic Reform Details Announced

    Quote:
    …tax cuts for companies that restructure or that invest in factories or equipment. The aim is to halt the downward trend in capital investment and boost such spending to 70 trillion yen annually over the next three years… Other priorities include subsidies to encourage more hiring and the establishment of special economic zones to promote deregulation and globalization of businesses, services and education…… boost female participation in the workforce by eliminating childcare waiting lists and by promoting three-year childcare leave…

    and also a rough idea of the next issues he'll tackle (again, in small, minute steps – Japan's over-protected farmers, for instance, are one of the last bastions of inefficiency that has to change to increase productivity – but he can't be seen to wildly lash and slice at their government-sponsored funding/spending/waste, or he'll lose his seat in a heart-beat) –

    Quote:
    ……agricultural reform and an export strategy for the sector, which was aimed at doubling farmers' income over the next decade…

      I'll leave you with something that I'm sure will leave you foaming at the mouth, I'm sure (just to tickle you, I admit – I love seeing you go off – can imagine you all red in the face and loving it ;)) – Stiglitz – "Japan is a Model, not a Cautionary Tale"

    Quote:
    Japan’s slow growth does not look so bad under close examination. Any serious student of economic performance needs to look not at overall growth, but at growth related to the size of the working age population. Japan’s working age population (ages 15 to 64) shrank 5.5 percent from 2001 to 2010, while the number of Americans of that age increased by 9.2 percent — so we should expect to see slower G.D.P. growth. But even before Abenomics, Japan’s real economic output, per member of the labor force, grew at a faster rate over the first decade of the century than that of the United States, Germany, Britain or Australia….if we broaden the range of metrics we consider, we see that even after two decades of “malaise,” Japan’s performance is far superior to that of the United States… Broader measures of performance are equally indicative. Life expectancy at birth (a good measure of the health of the economy) is a world-leading 83.6 years in Japan…second-highest in the world for attainment of university education, well ahead of the United States. And even in periods of slow growth, Japan has run its economy in a way that has kept a lid on the unemployment rate. During the global financial crisis, the rate peaked at 5.5 percent; in the two decades of its malaise, it never surpassed 5.8 percent…Though the structural policies have not been fully fleshed out, they are likely to include measures aimed at increasing labor-force participation, especially among women, and hopefully by facilitating employment for the large number of healthy elderly. Some have suggested encouraging immigration as well…

    Ziv Nakajima-Magen | Nippon Tradings International (NTI)
    http://www.nippontradings.com
    Email Me | Phone Me

    Ziv Nakajima-Magen - Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property

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