A number of Japanese corporations that we monitor at JMR Portfolio Intelligence have been in the news lately. As reported in a September 23, 2008 article by Marcus Gee, the Asia-Pacific Reporter for Canada’s The Globe and Mail, “When the Japanese asset bubble burst in the early 1990s, Japanese banks retreated to their own shores to lick their wounds. But the caution fed by that trauma meant they were hurt less by the U.S. subprime credit crisis than many U.S. and global lenders because they were less exposed. As a result, they are flush with cash at the very time that U.S. financial institutions are desperate for investment.” More recently it has become clear, however, that Japan is less unscathed than previously thought as evidenced by turmoil on the the nation’s benchmark Nikkei. Yesterday BBC News reported that Japan’s Nikkei 225 index fell 6.36% to its lowest close since October 1982 amid concerns at the yen’s high value.
Nevertheless, here are some highlights of the major activity that is taking place currently:
- Mitsubishi UFJ Financial Group (MUFG), Japan’s largest bank, is set to acquire 10-20% of Morgan Stanley
- Nomura Holdings Inc., Japan’s largest stock-broking firm, will acquire the Asian remnants of Lehman Brother’s
- Tokio Marine Holdings, Japan’s biggest property insurer, has acquired the U.S. insurer, Philadelphia Consolidated
- Mizuho Financial Group Inc. Japan’s second-largest bank by assets, announced plans to invest $1.2-billion in Merrill Lynch and $120-million in Evercore Partners, a U.S. mergers adviser.
And the list goes on. In his report Mr. Gee states that “With savings-obsessed Japanese holding more than $15-trillion in household assets, Japan has a huge pool of capital that could, in theory, help bail out a credit-starved Western world.” Yet, he goes on to explain that there are two schools of thought. Japan may be making moves that could re-establish the country as a financial powerhouse. On the other hand, it is possible that “Japanese banks are seeking to expand abroad because conditions at home are so poor. After suffering through the “lost decade” of the 1990s, then recovering in the earlier part of this decade, Japan is in economic straits again.”
Time will tell how things will shake out in this ever-shifting global financial landscape. In the meantime, perhaps we should all brush up on our Japanese…just in case.
Recent Comments