All Topics / Overseas Deals / Japan (and its Real-Estate market) Rides Again

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  • Profile photo of FreckleFreckle
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    zmagen wrote:
    no "move quick and break things" philosophies, they do it carefully, slowly, and with plenty of room to retract if things go bad

    Again your credibility is on the line with statements like this.

    Explain to me what part of slow and carefully applies to smashing their currency

    What part of slowly and carefully applies to BOJ QE operations and bond buying to hold together a volitile JGB market

    Slowly and carefully are not the words used by the global financial industry. Quite the opposite. They make the FED look like a bunch of timid school girls by comparison.

    Profile photo of FreckleFreckle
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    The next big theft comes next year when the consumption tax jumps from 5 – 8%. They expect to raise Y8T but then give back Y5T in stimulus. We all know who will get the most benefit from that stimulus package and it won't be Mr &Mrs Tojo

    Some how this is being pitched as debt reduction –

    Abe takes bold tax step towards cutting debt

    Japanese PM vows to unveil five trillion yen stimulus package to cushion the impact of

    raised sales tax to slash massive national debt

    ..and your typical crony transmission method,

    Cushioning the tax-increase pain, yesterday's package features public-works spending for the 2020 Tokyo Olympics and tax breaks to promote corporate capital spending. Officials will also consider an early end to a corporate tax add-on that has funded reconstruction following the 2011 earthquake and tsunami, which would save companies 900 billion yen.

    By the time you figure it out Ziv they'll have picked your pockets clean. They'll even take the holes.

    Profile photo of FreckleFreckle
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    *****The 99%

    "I pay more when I go grocery shopping. I also pay more for gasoline," said Noriko Kobayashi, who works at an advertising agency. "As my monthly salary and bonuses haven't increased, the rise in consumer prices hurts me," the 39-year-old said. "I haven't felt any benefits from Abenomics."

    Ms. Kobayashi's woes are shared by millions of others across the country who have seen their purchasing power shrink, and demonstrate that in the absence of solid wage growth, inflation isn't a cure-all for the economy.

    *****The 1%

    By fueling such optimism, Abenomics initially succeeded in sending Tokyo share prices higher. "Abe brought me ¥12 million in capital gains," said Kenji Kanazawa, a 62-year-old former consumer financier, who lives off assets he accumulated before he closed his business several years ago. "I highly appreciate Abenomics."

    Yep the rich get richer on the backs of the middle class and poor – wealth transfer in action.

    Profile photo of FreckleFreckle
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    From your fist link above;

    –Japan Sep Avg Wages +0.1% Y/Y, 1st Rise in 3 Months: Aug -0.9

    • this is a monthly average and doesn't elaborate on the trend

    –Japan Sep Avg Base Wages -0.3% Y/Y, 16th Straight Drop

    • base wages are falling on a long term trend.

    –Japan Sep Overtime Pay +3.5% Y/Y; 6th Straight Rise; Aug +3.0%

    • production is lifting on an expectation of rising consumption taxes

    –Japan Sep Special Pay +6.4% Y/Y, 1st Rise in 2 Months; Aug -9.2%

    • one offs that usually reflect share price movements etc. It's not clear who gets these payments

    –Japan 2013 Summer Bonuses +0.3% Y/Y, 1st Rise in 3 Years

    • only 40% actually got a rise

    –Japan Sep Total Hours Worked -0.6% Y/Y, 2nd Straight Drop

    • shrinking work force??

    –Japan Sep Mfg Overtime Worked +7.0% Y/Y, 3rd Straight Rise

    –Japan Sep Mfg Overtime Worked +0.4% M/M, 2nd Straight Rise

    • tax rise induced lift in production

    The trend is down no matter how much you want to try and dress it up. I expect to see unusual rises in production and O/T as consequences of incoming increases in consumption taxes. I mentioned it before that both NZ and AU experienced surges in demand and production prior to the introduction of GST. It simply brings forward consumption and leaves a vacuum behind it for some time after its introduction.

    Outside of base wages bonuses do not tell the full story because they are distortionary. The data indicates the magnitude of a rise in bonuses but does not show who or how many got any rise at all. Insurance surveys indicate less than 40% actually got a rise at all. The remainder 11% no change 49% received lower bonuses indicates how the upper exec layers are receiving the bulk of all bonuses while the man in the street continues the steady decline in middle class wealth.

    Profile photo of FreckleFreckle
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    It just keeps getting worse for the 99% at least….

    Japanese Households Without Savings Climb to Most Since ’63

    • The proportion reached 31 percent, according to a Bank of Japan survey released in Tokyo yesterday, up from 26 percent a year earlier and the highest since the poll began in 1963.
    • ’Grim’ Situation

      “The survey shows a grim wage situation,” said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “Now some companies are hinting at higher salaries so we may see a better result next year.”

    I won't hold my breath. But of course Abe's plan to 'shame' companies into raising wages should work.

    Jeez when I read this stuff I have to check and see I didn't fall down the rabbit hole.

    Alice is that you?…

    Profile photo of FreckleFreckle
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    When I read this comment I couldn't help but think how relevant it was to your poor old 99% of Japo's in the street..

    "Well, in our country," said Alice, still panting a little, "you'd generally get to somewhere else — if you run very fast for a long time, as we've been doing."

        "A slow sort of country!" said the Queen. "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Yup, the economy is failing, and the poor people are in pain –

    JOBLESS RATE DROPS, RETAIL SALES SURGE, SUPPORTING ABENOMICS

    Quote:
    …Japanese retail sales rose 3.1% from a year earlier in September, according to official data. That compares to a 1.1% increase in August and exceeds analysts' expectations of 1.9% growth. Retail sales rose 1.8% from the previous month.

    The higher retail sales have been boosted by increased household spending for the month. Overall household spending increased by 3.7% year over year in September, compared to a 1.6% decline in August. Analysts expected an increase of 0.7% for September.

    Meanwhile, Japan's jobless rate fell to 4.0% in September from 4.1% in August. The latest rate matches analysts' expectations.

    The spending and unemployment figures add to the success of Prime Minister Shinzo Abe, as he tries to pull Japan out of 15-year long deflation.

    Higher retail sales and consumer spending indicate better incomes of people, which would help end deflation.

    Recent consumer price data from the country showed that Japan is on track to meet its inflation target of 2%. In August, the consumer price index (CPI) inflation rose 0.9% year-on-year, the fastest pace since November 2008…

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

    Profile photo of FreckleFreckle
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    Come on Ziv you can do better than that. The idea that the consumer increase in spending is a positive is a stretch. There's lotsa misleading MSM comment around both consumer spending and employment.

    Consumer spending has been rising since 09.

    Your bigger than normal bump is in anticipation of rising consumption taxes and was spent mostly on luxury goods. That good ol' 1% again spending their Abe bribe  money… The simple fact is if you spend heaps today you can't spend heaps tomorrow. Distortionary spending patterns don't do any long term good for the economy and it's extremely hard on business planning.

    • Consumers started buying more after holding back since the global financial crisis that began in 2008, and the earthquake and tsunami disasters of March 2011. Household spending rose in the first four months of the year, gaining 5.2% in March. But a lull followed, with spending falling in three of the four months through August.

    So the upshot here is that Sep's bump was on the back of a 4 month lull. The coming tax will probably see continued increases in spending as late spenders get in before the tax increase.

    • Because of “rush-to-buy demand” before the sales tax goes up, the spending figures will likely strengthen even further in the coming months, said BNP Paribas Securities chief economist Ryutaro Kono.

    While on the face of it all this may sound great. It's not as good as it's being pumped by mass media hype.

    • However, many economists say the underlying spending trend remains somewhat weak, due in part to wages not rising.

    As I've suggested several times. Japan is likely to see temporary lifts in economic numbers as the BOJ artificially juices the market and fiscal policy influences spending patterns in the short term

    The unemployment figures are a joke. Unemployment rose in August to 4.1. Sep they're down to where they started. If you really want to talk about employment we can chat about the 1000's of salary men with the soul destroying window seat, the 10's of 1000's of underemployed who are parked in dead end jobs doing bugger all because companies can't fire them. Japan is as bad as France when it comes to dysfunctional IR laws. If companies could shed life sapping deadwood from their workforces the unemployment rate would be much much higher. Employment data out of Japan is on a par with the junk data out of the US.

    Profile photo of FreckleFreckle
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    Wages are rising at last!!

    TEPCO Doubles Hazard Pay For Fukushima Workers

    • Reuters reports, hazard pay for the thousands of workers on short-term contracts will be increased from 10,000 yen ($100) to 20,000 yen a day,

    My guess is that Fuk workers will invariably contribute to the declining population meme in coming years. All for $200/day

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Quite correct on the job laws front – fortunately, Abe hasn't been waiting for your ingenious couch commentary, and is way ahead of you –

    AS ABE WEIGHS IMMIGRATION REFORM, IBM EMERGES AS TEST CASE

    Quote:
    …the prime minister hopes to shift Japan away from an employment system that prioritizes stability to focus on growth. On a Sunday television show, Abe said he wanted more hiring based on specialization or location – jobs that would offer benefits closer to full-time positions but be easier to cut if deemed no longer necessary – as one of his planned labor market reforms.

    Advocates say these reforms would spur hiring and create opportunity for women and younger workers more likely to be stuck in lower-paid contract jobs without legal protection.

    "We need to move away from this notion of lifetime employment. That means all the Japanese individuals should be more independent," said Hiroshi Mikitani, chief executive of internet shopping firm Rakuten Inc and a member of an industrial competitiveness panel that advised Abe on economic reforms…

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

    Profile photo of FreckleFreckle
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    zmagen wrote:
    Abe hasn't been waiting for your ingenious couch commentary, and is way ahead of you –

    You reckon? Perhaps you should read your reference articles more thoroughly then;

    Still, analysts have cited the backpedalling as one of the key disappointments in Abe's growth strategy announced in June. Robert Feldman, chief economist at Morgan Stanley MUFG, gave Abe a "D plus" grade on labor market reform.

    Abe is first and foremost a politician. If you think he's going to cut his own (and parties) throat forcing labor reform onto those corporates who support him then you're delusional. I'll send you my left testicle if there's any meaningful change to labor market laws over the next decade.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Only if you send it to me in one of those beautifully hand-knit peter warmers that have been censored here previously ;)

    seriously though, folks, please bear witness to this promise of a testicle giveaway at the first sign of meaningful Japanese labor market reforms over the next decade – you may be called upon to mediate the transaction (as well as to impartially help decide what constitutes as "meaningful").

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

    Profile photo of FreckleFreckle
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    Sensitive bits aside for a moment.

    Labor reform is a buggered if you do buggered if you don't problem. Japan has one of the most inefficient labor markets in the world. About 144th I believe. While improving labor markets will enable business to be more competitive it will invariably send unemployment through the roof. I certainly have no faith in any Japanese govt to manage the transition to an efficient labor market environment competently and without huge distress to many individuals. Any transition would be bloody to say the least.

    Labor reform to IR laws cost the NLP in AU 2 terms in govt and stiil haunts them today. AU labor reform was a cake walk compared to what the Japanese market would experience.

    Their problem is they're 25 years too late.

    If you come out the other side of a 30 year global credit boom far worse than when you went in. What chance have you of fixing the mess when the global economy is tanking. A very very fat one I'm thinking.

    Profile photo of FreckleFreckle
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    Latest Q3 figures don't bode well.

    Japanese Q3 Growth Tumbles As Abenomics Cracks Following Slide In Consumption And Exports

    Bucket loads of QE and a half gutted currency aren't moving this economy in the right direction.

    When you're in a race to the bottom all you get is a pile up.

    "Frustrated" Liquidity Addicts Demand Moar From BOJ As Nikkei Rally Stalls, Abenomics Founders And "Hope Fades"

    A bigger problem is that suddenly hope is fading: "The chief Asian investment officer at one major global asset manager says foreign investors are getting increasingly “antsy” with the apparent lack of progress. “Personally, I wouldn’t be a major buyer of Japan,” he says. "If you buy now you are still buying on hope."

    It's all going so well….. who'd a thunk it… $75B/mth in the worlds 3rd largest economy and QE that makes the FED look half hearted don't seem to be enough to shock this baby into life. Moar on the way I'm guessing.

    Get your popcorn this is gonna be one helluva show.

    Profile photo of FreckleFreckle
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    As I’ve mentioned before Abe will go the way others who preceded him have.

    Will he complete this term or be red carded???

    Abe’s Support Drops Sharply in Japan
    Polls taken in recent days show a rapid downturn.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    If he keeps pushing bills of this sort, he can and should be ousted. The Japanese won't put up with anything that'll make companies like Tepco shielded any more than they currently are, in my opinion – the sort of public backlash that Fukushima has unleashed was unheard of in Japan – if anything could cost Abe his job, this'll be it. As for the economy,  wouldn't be bringing out the popcorn just yet (assuming you like disaster movies, as seems to be the case) – 2013 small-cap stocks suggests Abenomics taking hold 

    Quote:
    …small growth stocks up 134.6 %  this year…tankan survey of business conditions hit a 21 year high for small enterprises in the nonmanucaturing sector…

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

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Oh, and let's not forget the property market – after all, that's what we're all here for ;)Tokyo #1 Asia-Pacific Property Market for 2014 

    Quote:
    Japanese capital has emerged as magnet for investment in wake of major reforms introduced with aim of boosting economy…Transaction volume in Tokyo picked up significantly this year and, with the success of the stimulus programme yet to be determined, buying is expected to continue next year, the report shows…

    Personally, as mentioned several times here, we tend to avoid Tokyo – but there are more than enough high yield locations in the country beyond Tokyo and Osaka – personally, we prefer to go for Fukuoka (where prices are already rising a bit too fast for our taste, so probably only a few months left for the good deals there), Kumamoto, Sapporo and probably Nagoya this year and the next, as indicators seem to suggest – here's why – Japan RE Asset Purchase Strategies – 2013-14

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

    Profile photo of FreckleFreckle
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    When they print $73B/mth and big brother China prints $203B/mth its gotta go somewhere I suppose.

    Profile photo of Ziv Nakajima-MagenZiv Nakajima-Magen
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    Here we go – this is sure to hurt, but the smartest move by the man yet (as promised, those who read between the lines of his previous speeches saw this one coming) –

    ABE PASSES BIGGEST AGRICULTURAL REFORM SINCE MCARTHUR – CUTS MICRO FARMING TO REGAIN COMPETITIVENESS   

    Quote:
    …Government support, including payments to some farmers for not producing, accounted for 56 percent of the total earnings for Japanese agriculture last year…

    “The current system is so unproductive that it’s hurting the nation as a whole,” said Robert Feldman, head of Japan economic research at Morgan Stanley MUFG Securities Co. “The price of some agricultural goods is higher than it should be. Changing the agricultural laws is a good way to promote the conversion of land to more efficient use.”…

    the heart of the battle is the Japan Agricultural Cooperatives group, or the JA, which has unique powers to finance and insure farms, supply them with equipment and fertilizers and buy their produce…

    Under the control of the JA, Japan’s area under cultivation has fallen 25 percent in the past five decades. Farm-gate prices in the country are twice the world average, the OECD estimates. Agriculture’s share of gross domestic product dropped to less than 1 percent in 2011, from 9 percent in 1960, according to the government. “In the absence of fundamental reform, the agricultural sector will continue to wither, trapped in a cycle of low productivity, low earnings and dependence on subsidies and import protection,” OECD economists Randall Jones and Shingo Kimura wrote in a May report…

    A survey by the Ministry of Agriculture that year showed that almost nine out of ten farmers were over 50 and more than half of farming households saw it as a side business.

    Abe aims to change that.

    “Agriculture is the most difficult sector to reform,” Abe, 59, said in a Dec. 6 interview in Tokyo, adding that policy makers are making progress.

    Parliament passed a bill this month designed to reduce the amount of idle land and consolidate farms so they can be leased to managers who will boost productivity. The law will “enable farmland to be consolidated and taken over by those who are really motivated,” Abe said…

    A separate bill passed by parliament will introduce credit insurance, enabling farmers to borrow from banks and weakening the traditional co-operatives’ dominance in agricultural financing.

    The government on Nov. 26 approved a plan to end a four-decade policy of paying rice farmers to reduce their production to support prices. The “gentan” subsidy is scheduled to be halved from April 2014 and abolished by March 31, 2019…

    if anyone made the mistake of thinking the "third arrow" was an empty promise, this should be a fine example of how they misunderstand Japanese mentality. It's all about doing things slowly – but ever so thoroughly – and cutting away where necessary, without flinching.

    Best of luck to Abe – as mentioned, I hope this painful but necessary move doesn't cost him his job, because he's the first person showing willingness to tackle this crucial issue since the post-WW2 US enforced reforms were put into place.

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

    Profile photo of FreckleFreckle
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    zmagen wrote:

    if anyone made the mistake of thinking the "third arrow" was an empty promise, this should be a fine example of how they misunderstand Japanese mentality. It's all about doing things slowly – but ever so thoroughly – and cutting away where necessary, without flinching.

    I don't think anyone thought Abe would not try and enact reform. The doubt comes over how successful any reform would or could be. Ag is the path of least resistance. The Ag sector has no real power and given small farmers are on average over 50 they may be willing to relinquish their hold especially with no willing sons to take over the reins.

    Personably I'm not convinced it will make much difference if any at all. At less than 1% of GDP and fading fast how do you make this sector productive and globally competitive? NZ (& AU) is (are) one of the most advanced ag producers in the world yet I see lots of high productive land around major cities sitting idle. When I was a kid I worked on some of these local farms. More than 50% have gone. Many are lifestyle blocks.

    Corporatising Japanese farming won't change the economic landscape enough that you'll notice. You get mass produced shelf life specific foods that lack nutritional profiles of their predecessors and less diversification (choice) of varieties. When I was a kid the orchard over the fence grew 10 – 15 different varieties. Lucky if you can find four on the shelves now and they taste like crap by comparison.

    Corporatisation will see more mass production of select parts of the ag economy (low hanging fruit), lower employment needs due to efficiencies in mass production and less choice. NOTE: farmers markets are making a comeback in both NZ and AU due to lack of choice and poor quality (species grown for shelf life not taste and table).

    As tariff protections are removed you will see imports rise and displace much of what is currently grown locally. This is somewhat of an annoyance in both NZ and AU as supermarket chains import at lower prices and to beat seasonal fluctuations. Indigenous production struggles to hold its ground against cheap imports even here. Japan hasn't got a hope in hell of competing. From an economic point of view Japan will simply pay someone else to grow their food.

    One of the biggest down sides to this type of policy if introduced poorly is the destruction of small rural communities and local economies. When the AU govt tried to introduce water management controls to the Murray Darling system after the droughts there was hell to play. The initial policies where substantially modified as a result.

    You're unlikely to see any benefit from these so called reforms for a decade or more. Too long to have any real affect on the economy.

    Quote:
    Best of luck to Abe – as mentioned, I hope this painful but necessary move doesn't cost him his job, because he's the first person showing willingness to tackle this crucial issue since the post-WW2 US enforced reforms were put into place.

    Too small a part of the voting public to be a serious threat although it's early days in the reform process yet. I doubt the final outcome will bear little resemblance to the original if things get too tough.

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