TWO decades ago Japan accounted for 14% of the global economy. It is now worth just 8%. In 1988 eight of the top ten companies by value, and eight of the top ten banks, were Japanese; today none makes either list. Once the powerhouse of the world economy, Japan is now in genteel decline. By many indicators, the country is in the doldrums: its population is shrinking, economic growth has long been stagnant, property values and share prices have tumbled for years.
The grim national picture has provoked the government to unveil an exhaustive growth strategy. Yet amid the overall decline there are hidden growth markets. Companies that have targeted these niches are prospering nicely.
Consider the biggest long-term worry: demography. Japan’s population is expected to fall from 127m today to 124m by 2020 and 100m in 2050. The country is ageing, which means fewer workers and less production. But the shrinkage is not uniform. As rural areas empty, the population of Tokyo is expanding by about 1% a year. And, of course, there are more old people. The government reckons the number of over-65s in the greater Tokyo area will increase by 45% between 2005 and 2015.
Firms that service these groups will have a growing market. Benesse, Watami and others are opening scores of new nursing homes this year—“turning silver into gold”, as Japanese businessmen quip. Watami has an expanding meal-delivery service for the elderly and aims to turn over ¥50 billion (around $550m) by 2013. As couples marry later—by two additional years over the past decade—and put off having children, those in Tokyo spend 40% more on weddings than ten years ago, according to Zexy, a wedding magazine.
close look at the restaurant industry shows that although the number of eateries has fallen since 1998, the market for packaged food like bento lunch boxes has nearly doubled. Indeed, fast food in general is thriving (see chart). McDonald’s enjoyed its sixth consecutive increase in same-store sales last year; KFC saw profits soar as mothers took a break from cooking.
Another promising niche is buried within pharmaceuticals. Overall drug sales eke out 3% growth annually—not too impressive in an ageing country. But sales of generic drugs are surging three times faster. The government is encouraging their use to bring down costs, fuelling demand. Generics make up only 20% of Japan’s $80 billion-a-year drug market by volume, compared with more than 60% in America and Britain, so there is plenty of room to grow. Firms like Nichi-Iko, Towa and Sawai have benefited, as have non-Japanese makers like Sandoz and Impax.
There is some optimism even in retailing. Last year department-store sales fell by 10% and supermarket sales dropped by 4%, both marking 13 consecutive years of decline. But two categories are booming. Online shopping has grown by 17% a year since 2005 and is expected to expand by nearly 10% annually to 2015, according to McKinsey, a consultancy. Market leaders like Rakuten, Yahoo! Japan and Kakaku are flourishing. And as luxury-goods sales fall, cheap items are selling well. Sales have surged at Uniqlo, H&M and Forever 21 (for clothing), as well as at IKEA and Nitori (for furniture).
A few firms are actually learning to take advantage of Japan’s overall contraction. Falling commercial-property values and rising vacancies in Tokyo have allowed Sagawa, a parcel-delivery firm, to expand its store network by 80% to 540 shops. It is thus better placed to handle a surge in e-commerce deliveries. Falling residential land prices have discouraged people from moving but encouraged them to renovate, boosting building firms.
Some of the most adept at exploiting the pockets of growth are foreign firms, which may view the market afresh or are free of traditional ways of operating. MAC Cosmetics, part of America’s Estée Lauder, outpaces its rivals in part by trying new things, such as temporary sales boutiques inside clothing shops. Some Japanese firms that have benefited from the lucrative submarkets have middling overall results, because their corporate sprawl includes declining businesses.
Corporate Japan has responded to the decline of its domestic market by becoming more global. Mergers and acquisitions overseas have been brisk. Nomura, Kirin, Toshiba and others have made big acquisitions abroad in recent years. In 2008 Daiichi Sankyo, Japan’s third-biggest drug company, bought Ranbaxy, an Indian generics-maker, in part to bring the drugs home. Moreover, although the country continues to resist immigration, its companies are scrambling to attract foreign staff. Panasonic, Uniqlo and Komatsu, a heavy-equipment-maker, have ambitious recruitment targets. A few firms are requiring English at executive meetings and offering globally competitive pay.
The overall pessimism of Japanese bosses is understandable. But some firms have found fortune even in a declining economy. Look hard enough, and you’ll see a surprising number of opportunities amid the gloom.
http://www.economist.com/node/16591237?story_id=16591237&CFID=136476446&CFTOKEN=40734548
Wednesday, July 28, 2010
July - Deflation - Price Cutting Gyudon Chains Gain Market share and revenues
Three major "gyudon" -- beef-on-rice -- restaurant chains have started to offer their regular-sized bowls at discounted prices for a limited time, aiming to survive the heated price war during the summer season.
Sukiya, operated by Zensho Co., began selling its regular-sized gyudon bowl at 250 yen on July 27, 30 yen cheaper than usual, followed by Yoshinoya Co. offering its version at 270 yen -- down 110 yen -- from July 28. Matsuya Foods Co. will drop its price to 250 yen -- a drop of 70 yen -- from July 29.
At noon on July 27, there was a line of some 30 people in front of Sukiya's Shinagawa Higashi restaurant in Tokyo's Minato Ward, which sparked the price-cutting war.
"I often order Sukiya's regular size because its usual price is the cheapest," says a 52-year-old man who works for a company nearby. "The range of the price reduction is small, but I appreciate that I can eat it for 250 yen."
As of July 27, there were 1,473 Sukiya outlets in Japan. The chain became the biggest gyudon provider in September 2008, surpassing Yoshinoya. Sukiya has been enjoying good store sales since March this year, up more than 10 percent compared to the same period last year. Matsuya (755 outlets as of the end of June, the third largest company in the market) has also been seeing a year-on-year rise in sales since April.
Meanwhile, Yoshinoya (1,185 outlets as of the end of June), the No. 2 gyudon company, has been suffering a double-digit year-on-year drop since December last year, except April when it reduced the price of its regular-sized gyudon dish for a limited time, and saw a 6.9 percent decline from last year.
In December last year, Sukiya and Matsuya discounted their regular-sized gyudon but Yoshinoya did not follow the trend in consideration of the high cost of raw materials, including relatively expensive U.S. beef. Sukiya and Matsuya have increased sales with more customers despite a decline in the average amount each customer spends. Both companies achieved double-digit increases in net profits for their consolidated results for the business year ending in March 2010, compared to the previous term.
As a result of a decline in customer traffic, comparable-store sales at Yoshinoya have fallen. With its ailing group companies, Yoshinoya Holdings Co. suffered an overall deficit of 8.9 billion yen in its consolidated financial statements for the business year ending in February 2010, its worst result ever. In an effort to combat this, Yoshinoya ran a limited-time offer for its gyudon in April this year.
However, the two rivals competed against Yoshinoya's attempt with even cheaper prices. There were only two days when Yoshinoya was able to offer its gyudon at the lowest price, compared to the other chains.
http://mdn.mainichi.jp/mdnnews/business/news/20100728p2a00m0na012000c.html
Sukiya, operated by Zensho Co., began selling its regular-sized gyudon bowl at 250 yen on July 27, 30 yen cheaper than usual, followed by Yoshinoya Co. offering its version at 270 yen -- down 110 yen -- from July 28. Matsuya Foods Co. will drop its price to 250 yen -- a drop of 70 yen -- from July 29.
At noon on July 27, there was a line of some 30 people in front of Sukiya's Shinagawa Higashi restaurant in Tokyo's Minato Ward, which sparked the price-cutting war.
"I often order Sukiya's regular size because its usual price is the cheapest," says a 52-year-old man who works for a company nearby. "The range of the price reduction is small, but I appreciate that I can eat it for 250 yen."
As of July 27, there were 1,473 Sukiya outlets in Japan. The chain became the biggest gyudon provider in September 2008, surpassing Yoshinoya. Sukiya has been enjoying good store sales since March this year, up more than 10 percent compared to the same period last year. Matsuya (755 outlets as of the end of June, the third largest company in the market) has also been seeing a year-on-year rise in sales since April.
Meanwhile, Yoshinoya (1,185 outlets as of the end of June), the No. 2 gyudon company, has been suffering a double-digit year-on-year drop since December last year, except April when it reduced the price of its regular-sized gyudon dish for a limited time, and saw a 6.9 percent decline from last year.
In December last year, Sukiya and Matsuya discounted their regular-sized gyudon but Yoshinoya did not follow the trend in consideration of the high cost of raw materials, including relatively expensive U.S. beef. Sukiya and Matsuya have increased sales with more customers despite a decline in the average amount each customer spends. Both companies achieved double-digit increases in net profits for their consolidated results for the business year ending in March 2010, compared to the previous term.
As a result of a decline in customer traffic, comparable-store sales at Yoshinoya have fallen. With its ailing group companies, Yoshinoya Holdings Co. suffered an overall deficit of 8.9 billion yen in its consolidated financial statements for the business year ending in February 2010, its worst result ever. In an effort to combat this, Yoshinoya ran a limited-time offer for its gyudon in April this year.
However, the two rivals competed against Yoshinoya's attempt with even cheaper prices. There were only two days when Yoshinoya was able to offer its gyudon at the lowest price, compared to the other chains.
http://mdn.mainichi.jp/mdnnews/business/news/20100728p2a00m0na012000c.html
Tuesday, July 27, 2010
2009 - China Surpasses US as Japan's largest export market
According to the Financial Times, "China replaced the US as Japan’s biggest export market last year(2009)".(1) Here's a chart from RIETI showing the relative shares of Japan's total exports:
It's remarkable that the proportion of exports to the USA has practically halved in ten years. Figures from Japan's Ministry of Finance show that Japan actually had a trade deficit with China in 2009, while maintaining a trade surplus with the US.(2) This result would be consistent with the idea that Japanese companies source components from China for products that are in part then exported to the rest of the world.
This shift might cause the focus of Japan's monetary authorities to switch somewhat regarding foreign exchange matters. The dollar/yen rate will be a concern more for the potential effect on Japan's holdings of US Treasury debt than for its effect on exports to the US. Ending the yuan peg by the PRC and the likely resulting appreciation versus the dollar would have the effect of increasing the costs to Japanese manufacturers of parts sourced in China but would also increase the purchasing power for Chinese buyers of Japan's finished goods. At the same time, Japanese manufacturers would be squeezed by the increased cost of components from China for products shipped to the USA given that the yen/dollar exchange rate remained stable. Increasing exports to China would be a logical priority for Japan's economic policymakers.
http://seekingalpha.com/article/214879-japan-turns-to-china-as-a-primary-export-market?source=feed
It's remarkable that the proportion of exports to the USA has practically halved in ten years. Figures from Japan's Ministry of Finance show that Japan actually had a trade deficit with China in 2009, while maintaining a trade surplus with the US.(2) This result would be consistent with the idea that Japanese companies source components from China for products that are in part then exported to the rest of the world.
This shift might cause the focus of Japan's monetary authorities to switch somewhat regarding foreign exchange matters. The dollar/yen rate will be a concern more for the potential effect on Japan's holdings of US Treasury debt than for its effect on exports to the US. Ending the yuan peg by the PRC and the likely resulting appreciation versus the dollar would have the effect of increasing the costs to Japanese manufacturers of parts sourced in China but would also increase the purchasing power for Chinese buyers of Japan's finished goods. At the same time, Japanese manufacturers would be squeezed by the increased cost of components from China for products shipped to the USA given that the yen/dollar exchange rate remained stable. Increasing exports to China would be a logical priority for Japan's economic policymakers.
http://seekingalpha.com/article/214879-japan-turns-to-china-as-a-primary-export-market?source=feed
Toyota to Cut Production by 15% Due to Strong Yen
Toyota Motor Corp. plans to cut vehicle production in Japan by a further 15 percent over the next five to six years, the Financial Times reported.
The Japanese automaker aims to reduce output to about 70 percent of its current domestic capacity of 3.9 million vehicles, the newspaper said, citing Executive Vice President Atsushi Niimi.
Toyota will expand production in China, Brazil and the U.S. because of the strong yen, the report said.
http://www.bloomberg.com/news/2010-07-27/toyota-plans-to-cut-vehicle-production-in-japan-on-stronger-yen-ft-says.html
JAL Lenders Agree to Alomst 90% Debt Waiver
Efforts to save Japan Airlines Corp. have been boosted by an agreement between the airline and its banks on huge debt waivers.
According to sources, the rehabilitation plan for the bankrupt airline centers on getting the banks to write off about 520 billion yen ($5.95 billion) in loans. An additional 350 billion yen in public funds is expected to be plowed into the company.
JAL and the Enterprise Turnaround Initiative Corp., which is overseeing the rehabilitation plan, initially asked the airline's main banks to forgive 90 percent of the money owed them.
The banks resisted, saying they were being asked to shoulder a disproportionate burden. They pointed out that fuel charges owed to other businesses were fully protected when JAL went bankrupt in January, because of the need to keep planes flying.
The two sides appear to have reached agreement last week on a slightly reduced waiver, amounting to 87.5 percent of the loans. This lightens the banks' burden by about 20 billion yen.
With the compromise in place, JAL and the enterprise turnaround corporation now expect to submit a rehabilitation plan to the Tokyo District Court in late August.
Japan Airlines was 950 billion yen in debt at the end of March 2010, the result of sagging passenger numbers and a large fleet of outdated, fuel-guzzling and inefficient aircraft such as the Boeing 747.
JAL and the enterprise turnaround corporation hope to get JAL out of the red by the end of the current fiscal year.
http://www.asahi.com/english/TKY201007250281.html
According to sources, the rehabilitation plan for the bankrupt airline centers on getting the banks to write off about 520 billion yen ($5.95 billion) in loans. An additional 350 billion yen in public funds is expected to be plowed into the company.
JAL and the Enterprise Turnaround Initiative Corp., which is overseeing the rehabilitation plan, initially asked the airline's main banks to forgive 90 percent of the money owed them.
The banks resisted, saying they were being asked to shoulder a disproportionate burden. They pointed out that fuel charges owed to other businesses were fully protected when JAL went bankrupt in January, because of the need to keep planes flying.
The two sides appear to have reached agreement last week on a slightly reduced waiver, amounting to 87.5 percent of the loans. This lightens the banks' burden by about 20 billion yen.
With the compromise in place, JAL and the enterprise turnaround corporation now expect to submit a rehabilitation plan to the Tokyo District Court in late August.
Japan Airlines was 950 billion yen in debt at the end of March 2010, the result of sagging passenger numbers and a large fleet of outdated, fuel-guzzling and inefficient aircraft such as the Boeing 747.
JAL and the enterprise turnaround corporation hope to get JAL out of the red by the end of the current fiscal year.
http://www.asahi.com/english/TKY201007250281.html
Monday, July 26, 2010
June - Exports Rises Decrease - Grim outlook for H2
Exports in June rose 27.7 percent from a year earlier to ¥5.866 trillion, marking the seventh straight month of increase, although the rate of growth narrowed, Finance Ministry data showed Monday.
Exports for the first half of 2010 came to ¥33.097 trillion, up 37.9 percent from a year earlier, increasing for the first time in four half-year periods, according to the ministry's preliminary report.
Although exports continued to grow, a ministry official warned that the pace of expansion could be slowing down, citing the month's seasonally adjusted data, which declined for the second straight month.
"Given that exports are the sole driver of Japan's moderate economic recovery, the expansion is poised to slow in the third and the four quarters," said Yoshiki Shinke, a senior economist at Dai-ichi Life Research. "The yen's gain is also posing a threat to exporters' profits."
The yen gained 7 percent versus the dollar and 11 percent per euro in the past three months.
"The yen has appreciated too much," Koji Miyahara, chairman of shipping company Nippon Yusen K.K., said last week. "I'm hoping the yen will depreciate to a range of 95 to 100 to the dollar as soon as possible."
Exporters' currency woes are in contrast with their rivals in South Korea, where a weaker won helped Samsung Electronics Co. and Hynix Semiconductor Inc. post record earnings in the second quarter.
In June, Japan's trade surplus totaled ¥686.96 billion, up 41.1 percent year on year, logging the 15th consecutive month of surplus.
Exports to the United States were up 21.1 percent to ¥914.48 billion on the back of solid demand for automobiles and related components.
Those to Europe grew 9.0 percent to ¥611.22 billion.
Exports to Asia rose 31.7 percent to ¥3.301 trillion, but the pace of growth has been narrowing since earlier this year.
Japan enjoyed a 22.0 percent rise in exports to China in June, but its trade balance with the country suffered a deficit of ¥45.93 billion.
In the January-June period, the trade surplus came to ¥3.401 trillion, rising for the second consecutive half-year period.
In trade with Asia, the surplus hit a record ¥5.218 trillion, up 179.8 percent from the same period a year earlier, with exports to the region also climbing 46.4 percent, the fastest pace on record.
The deficit with China in the six-month period amounted to ¥140.73 billion, the smallest since the first half of 1993 and down 84.5 percent year on year.
Exports to the United States surged 29.0 percent to ¥4.961 trillion, bringing Japan's trade surplus with the country to ¥1.965 trillion, up 75.8 percent.
Exports to Europe rose 17.2 percent to ¥3.715 trillion.
The figures are measured on a customs-cleared basis before adjustments for seasonal factors.
Nomura goes 'neutral' BLOOMBERG Nomura Holdings Inc. cut its recommendation on Japanese shares to "neutral," citing a weaker profit outlook and slower economic growth prospects.
"The recovery in Japanese earnings is already beginning to lose momentum," Nomura analysts including Ian Scott wrote in a report dated Friday. The nation's largest brokerage on Monday also downgraded its forecast for economic growth as the strengthening yen threatens the export-fueled rebound.
The Nikkei 225 stock average has slid 14 percent this fiscal year on concern the European debt crisis will reduce earnings for Japanese exporters.
http://search.japantimes.co.jp/cgi-bin/nb20100727n3.html
Exports for the first half of 2010 came to ¥33.097 trillion, up 37.9 percent from a year earlier, increasing for the first time in four half-year periods, according to the ministry's preliminary report.
Although exports continued to grow, a ministry official warned that the pace of expansion could be slowing down, citing the month's seasonally adjusted data, which declined for the second straight month.
"Given that exports are the sole driver of Japan's moderate economic recovery, the expansion is poised to slow in the third and the four quarters," said Yoshiki Shinke, a senior economist at Dai-ichi Life Research. "The yen's gain is also posing a threat to exporters' profits."
The yen gained 7 percent versus the dollar and 11 percent per euro in the past three months.
"The yen has appreciated too much," Koji Miyahara, chairman of shipping company Nippon Yusen K.K., said last week. "I'm hoping the yen will depreciate to a range of 95 to 100 to the dollar as soon as possible."
Exporters' currency woes are in contrast with their rivals in South Korea, where a weaker won helped Samsung Electronics Co. and Hynix Semiconductor Inc. post record earnings in the second quarter.
In June, Japan's trade surplus totaled ¥686.96 billion, up 41.1 percent year on year, logging the 15th consecutive month of surplus.
Exports to the United States were up 21.1 percent to ¥914.48 billion on the back of solid demand for automobiles and related components.
Those to Europe grew 9.0 percent to ¥611.22 billion.
Exports to Asia rose 31.7 percent to ¥3.301 trillion, but the pace of growth has been narrowing since earlier this year.
Japan enjoyed a 22.0 percent rise in exports to China in June, but its trade balance with the country suffered a deficit of ¥45.93 billion.
In the January-June period, the trade surplus came to ¥3.401 trillion, rising for the second consecutive half-year period.
In trade with Asia, the surplus hit a record ¥5.218 trillion, up 179.8 percent from the same period a year earlier, with exports to the region also climbing 46.4 percent, the fastest pace on record.
The deficit with China in the six-month period amounted to ¥140.73 billion, the smallest since the first half of 1993 and down 84.5 percent year on year.
Exports to the United States surged 29.0 percent to ¥4.961 trillion, bringing Japan's trade surplus with the country to ¥1.965 trillion, up 75.8 percent.
Exports to Europe rose 17.2 percent to ¥3.715 trillion.
The figures are measured on a customs-cleared basis before adjustments for seasonal factors.
Nomura goes 'neutral' BLOOMBERG Nomura Holdings Inc. cut its recommendation on Japanese shares to "neutral," citing a weaker profit outlook and slower economic growth prospects.
"The recovery in Japanese earnings is already beginning to lose momentum," Nomura analysts including Ian Scott wrote in a report dated Friday. The nation's largest brokerage on Monday also downgraded its forecast for economic growth as the strengthening yen threatens the export-fueled rebound.
The Nikkei 225 stock average has slid 14 percent this fiscal year on concern the European debt crisis will reduce earnings for Japanese exporters.
http://search.japantimes.co.jp/cgi-bin/nb20100727n3.html
Colony's Barrack says Real Estate will have low returns; workouts/restructuring "exhausting"
Real estate investors will have to work even harder just to achieve single and low-double digit returns, according to Colony Capital founder Tom Barrack.
Barrack spoke today exclusively with PERE following widely reported comments this week that he finds real estate to be “tiring and boring”. Barrack said the comment was intended to highlight a market changed by the credit crisis, in which “the fast guys looking for fast money” are now a thing of the past.
The report had caused some head-scratching among real estate market insiders, who privately questioned whether Barrack was signalling less enthusiasm for the asset class.
However in the interview, Barrack said that his commitment to real estate has never been stronger. “Ninety-nine percent of our assets are in real estate, and 100 percent of my life has been real estate,” he said.
Barrack insisted that amid an era of low interest rates, relaxation of mark-to-market accounting rules, and so-called extend and pretend debt refinancings, real estate had come down to “single and doubles” returns, with “no outsize returns and no velocity”.
“The reality of life is that returns for real estate for the foreseeable future are going to be ordinary not extraordinary,” Barrack said, noting that this view excluded Asia, the Middle East and South America.
As such, he added, there was really only one game in town – with debt the new equity and real estate the new value-add. However, Barrack warned that debt workouts, recapitalisations, restructurings and discounted payoffs were “exhausting”.
“It’s real work,” he said, explaining that for complex, securitised loans in particular an investor could face up to 100 bondholders invested in just one mortgage but “all with different agendas testing waterfall schedules and rules that have never been tested before. All this restructuring is going very slowly,” he said. “Its hand-to-hand warfare and it’s happening at the asset level itself.”
Colony this week closed its second portfolio of loans from the US banking regulator, the Federal Deposit Insurance Corporation, paying $445 million for 1,660 mortgages. The firm, in a venture with the Cogsville Group, agreed to pay 59 cents on the dollar for the portfolio, which has a face value of $1.85 billion and includes loans from 22 failed banks. Unlike many US banks holding real estate assets, the FDIC was the only willing large-scale seller. Instead, Barrack said, many private equity real estate firms were having to search for opportunities among the borrowers themselves.
The Colony founder predicted that inflationary pressures would eventually create more demand for real estate in the US. Once that happened, the “currency of choice will be hard assets”, he said.
“We cannot keep running a $1.5 trillion deficit and printing money to spend our way out of problems without some effect. Money will return to US assets and my instinct is that, for the most part, real estate will return to a very solid 10 percent,” Barrack said, adding that this would “create select opportunities for opportunistic players.”
The rise in demand is “not around the corner”, he said. “It could be three to seven years out.”
Barrack said the private equity real estate industry had been “spoiled by incredible outsized returns fuelled by high octane growth”, but “no-one had anticipated the power of zero interest rates and how you can hold [onto real estate] for a long, long time.”
The wave of deleveraging that was expected to hit commercial real estate globally didn’t happen as it did in the residential sector, he added, meaning too many people were “eeking along”.
Barrack spoke today exclusively with PERE following widely reported comments this week that he finds real estate to be “tiring and boring”. Barrack said the comment was intended to highlight a market changed by the credit crisis, in which “the fast guys looking for fast money” are now a thing of the past.
The report had caused some head-scratching among real estate market insiders, who privately questioned whether Barrack was signalling less enthusiasm for the asset class.
However in the interview, Barrack said that his commitment to real estate has never been stronger. “Ninety-nine percent of our assets are in real estate, and 100 percent of my life has been real estate,” he said.
Barrack insisted that amid an era of low interest rates, relaxation of mark-to-market accounting rules, and so-called extend and pretend debt refinancings, real estate had come down to “single and doubles” returns, with “no outsize returns and no velocity”.
“The reality of life is that returns for real estate for the foreseeable future are going to be ordinary not extraordinary,” Barrack said, noting that this view excluded Asia, the Middle East and South America.
As such, he added, there was really only one game in town – with debt the new equity and real estate the new value-add. However, Barrack warned that debt workouts, recapitalisations, restructurings and discounted payoffs were “exhausting”.
“It’s real work,” he said, explaining that for complex, securitised loans in particular an investor could face up to 100 bondholders invested in just one mortgage but “all with different agendas testing waterfall schedules and rules that have never been tested before. All this restructuring is going very slowly,” he said. “Its hand-to-hand warfare and it’s happening at the asset level itself.”
Colony this week closed its second portfolio of loans from the US banking regulator, the Federal Deposit Insurance Corporation, paying $445 million for 1,660 mortgages. The firm, in a venture with the Cogsville Group, agreed to pay 59 cents on the dollar for the portfolio, which has a face value of $1.85 billion and includes loans from 22 failed banks. Unlike many US banks holding real estate assets, the FDIC was the only willing large-scale seller. Instead, Barrack said, many private equity real estate firms were having to search for opportunities among the borrowers themselves.
The Colony founder predicted that inflationary pressures would eventually create more demand for real estate in the US. Once that happened, the “currency of choice will be hard assets”, he said.
“We cannot keep running a $1.5 trillion deficit and printing money to spend our way out of problems without some effect. Money will return to US assets and my instinct is that, for the most part, real estate will return to a very solid 10 percent,” Barrack said, adding that this would “create select opportunities for opportunistic players.”
The rise in demand is “not around the corner”, he said. “It could be three to seven years out.”
Barrack said the private equity real estate industry had been “spoiled by incredible outsized returns fuelled by high octane growth”, but “no-one had anticipated the power of zero interest rates and how you can hold [onto real estate] for a long, long time.”
The wave of deleveraging that was expected to hit commercial real estate globally didn’t happen as it did in the residential sector, he added, meaning too many people were “eeking along”.
Blackstone Real Estate Fund recovers from 46c lows to 85c
The Blackstone Group’s real estate operations, which has about $10 billion in dry powder, has come out of the global financial meltdown “fully intact and stronger than ever”, said the firm’s chief Steve Schwarzman during an earnings call Thursday.
In a mark of turning fortunes, Blackstone’s sixth global opportunity real estate fund, which was raised in 2008 “at the top of the market”, was valued at 85 cents on the dollar and “likely will be in excess of a dollar by year-end if current trends continue”, Schwarzman said. The $10.9 billion Blackstone Real Estate Partners VI was being carried at about 46 cents just last year, he said.
Recovery in the real estate portfolio has to do with a recovery in the broader markets, especially in hospitality and an increased demand for “high-quality office assets … in select markets where we happen to be highly concentrated”, Schwarzman said.
The firm also had been able to improve portfolio operations and restructure debt, he said. Overall, Blackstone had “reduced, refinanced or extended over $52 billion of portfolio company debt since the beginning of 2009”, Schwarzman said.
Revenue from Blackstone’s real estate operations soared in the second quarter, climbing to $208.5 million, compared with losses of $18.9 million in the second quarter of 2009. Revenues increases were driven by improved operating performance and projected cash flows across real estate, the firm said in a statement.
Blackstone’s net return for real estate in the second quarter was 17 percent, compared to negative 20 percent in the second quarter of 2009.
The firm spent $643.8 million of limited partner capital in the second quarter, up from $231.5 million in the same period last year.
http://www.perenews.com/article.aspx?article=54846
Blackstone "reduces, refinances or extends" more $52bn of debt
The Blackstone Group has “reduced, refinanced or extended” more than $52 billion of portfolio debt since the beginning of 2009, Steve Schwarzman, the firm’s chief executive officer, said during an earnings call. The figures quotes pertained to the company’s holdings across multiple strategies and asset classes.
As an example, the firm bought back debt at a discount in its portfolio company Michaels Stores and sold it for more than six times original cost, Schwarzman said.
“Another driver in some of our valuations over the last 12 months has been the ability to extinguish debt at a discount and take advantage of some of the dislocation of the credit markets to create value,” Blackstone’s president Tony James said during the call.
Earlier this year, Blackstone was able to shave off $4 billion of debt on its Hilton hotels portfolio company and push back debt maturities by two years to 2015.
Private equity firms have been working to control debt loads in the portfolios. Standard & Poor’s estimated earlier this year that about $140 billion of leveraged buyout-related loans will come due in 2014. Close to $80 billion will mature in 2013 and about $25 billion in 2015.
A number of private equity firms have had success refinancing portfolio company debt, but some critics say the moves are only temporary measures and the companies that have been through refinancings have only bought themselves more time to deal with their debt burdens.
Moody’s Investors Service reported earlier this week that casino giant Harrah’s still has a debt problem, despite refinancings, and will need to go public, sell assets or restructure. The company, bought by TPG and Apollo Global Management in 2008 for $27 billion, makes about $1.8 billion a year in interest payments.
http://www.perenews.com/article.aspx?article=54882
Japan Leisure Hotels Downgrades Revenues and EBIDTA (18%)
Japan Leisure Hotels warns that revenue and EBITDA for the year to the end of December will be lower than current market expectations.
The Yokkaichi hotel was closed for renovation for the majority of the first six months of the current financial year.
Some other hotels were experiencing reduced occupancy due to competitors aggressively reducing prices and some hotels nearing their scheduled refurbishment.
The firm said: "The asset manager is taking immediate steps to address these short term issues, where possible, and is confident that it they will be quickly resolved."
The firm said the board's long term confidence in the company's business model, based on the unique features of Japanese culture and demographics, remains unchanged.
The company will announce its half year results for the six months to the end of June on 28 September.
http://www.bfnnews.com/display/?id=3908724§ionId=standardNews
Analyst, Hardman has the following to say -
A Trading Statement this morning says that revenue and EBITDA
for the current year will be lower than market expectations, so we
are reducing our estimates.
• Price cutting by competitors has been impacting some hotels.
One of the units has seen its REVPAR fall by 12% in recent
weeks. But some hotels are holding up well and this is not a
general trend.
• The newly refurbished Yokkaichi, the second largest hotel in
the group, has experienced a slower than expected build-up
after the refurbishment that took it out of action between
January and May. It would be premature to read too much into
eight weeks’ trading after what was supposed to be a ‘soft’ reopening,
but we (and the management) will be watching
closely for lessons to be applied to other refurbishments likely
in 2011.
• Market conditions are aggressive. This is not a surprise,
because the Japanese economy is flat, and still experiencing
price deflation. JPLH has been reducing costs, and has been
introducing marketing initiatives such as a loyalty card.
We already expected the first half to show a modest loss, because
of the loss of income from the Yokkaichi during its refurbishment.
We are now reducing our second half estimate. The effect for the
full year will be:
• Revenue growth of 2% rather than the 7% we had previously
expected.
• EBITDA of Y274m rather than the Y334m we previously
forecast. Our new forecast is still higher than the 2009
EBITDA however, the company is still moving forward.
• Adjusted profit of Y34m and eps of UK0.3p, still ahead of the
previous year, in spite of the Yokkaichi closure.
• We retain our dividend forecast at UK1.5p, 50% up on 2009.
We have pulled back our 2011 estimates also.
Overall, the announcement should have limited impact upon the
share price, because JPLH’s value lies in its potential once the
chain has reached three to five times its current size, rather than
its 2010 or 2011 earnings.
The Yokkaichi hotel was closed for renovation for the majority of the first six months of the current financial year.
Some other hotels were experiencing reduced occupancy due to competitors aggressively reducing prices and some hotels nearing their scheduled refurbishment.
The firm said: "The asset manager is taking immediate steps to address these short term issues, where possible, and is confident that it they will be quickly resolved."
The firm said the board's long term confidence in the company's business model, based on the unique features of Japanese culture and demographics, remains unchanged.
The company will announce its half year results for the six months to the end of June on 28 September.
http://www.bfnnews.com/display/?id=3908724§ionId=standardNews
Analyst, Hardman has the following to say -
A Trading Statement this morning says that revenue and EBITDA
for the current year will be lower than market expectations, so we
are reducing our estimates.
• Price cutting by competitors has been impacting some hotels.
One of the units has seen its REVPAR fall by 12% in recent
weeks. But some hotels are holding up well and this is not a
general trend.
• The newly refurbished Yokkaichi, the second largest hotel in
the group, has experienced a slower than expected build-up
after the refurbishment that took it out of action between
January and May. It would be premature to read too much into
eight weeks’ trading after what was supposed to be a ‘soft’ reopening,
but we (and the management) will be watching
closely for lessons to be applied to other refurbishments likely
in 2011.
• Market conditions are aggressive. This is not a surprise,
because the Japanese economy is flat, and still experiencing
price deflation. JPLH has been reducing costs, and has been
introducing marketing initiatives such as a loyalty card.
We already expected the first half to show a modest loss, because
of the loss of income from the Yokkaichi during its refurbishment.
We are now reducing our second half estimate. The effect for the
full year will be:
• Revenue growth of 2% rather than the 7% we had previously
expected.
• EBITDA of Y274m rather than the Y334m we previously
forecast. Our new forecast is still higher than the 2009
EBITDA however, the company is still moving forward.
• Adjusted profit of Y34m and eps of UK0.3p, still ahead of the
previous year, in spite of the Yokkaichi closure.
• We retain our dividend forecast at UK1.5p, 50% up on 2009.
We have pulled back our 2011 estimates also.
Overall, the announcement should have limited impact upon the
share price, because JPLH’s value lies in its potential once the
chain has reached three to five times its current size, rather than
its 2010 or 2011 earnings.
Thursday, July 22, 2010
Summer bonuses at large firms rise 1st time in 3 yrs
Major Japanese companies are paying an average 757,638 yen in summer bonuses, up 0.55 percent from a year ago and the first increase in three years, the Japan Business Federation said Tuesday.
The weighted average of amounts the firms struck with their labor unions rose 1.02 percent in the manufacturing sector to 741,395 yen but dipped 0.77 percent for nonmanufacturers to 804,706 yen, said Japan's most influential business lobby known as Nippon Keidanren.
The overall data, derived from a survey on 251 firms to which 163 disclosed their average for unionized workers, suggest that bonuses have bottomed out after registering a record 17.15 percent fall last summer amid the worldwide economic slump.
The survey covered companies in 21 industries that have a workforce of at least 500 and are traded on the First Section of the Tokyo Stock Exchange.
http://www.breitbart.com/article.php?id=D9H2MRK82&show_article=1
The weighted average of amounts the firms struck with their labor unions rose 1.02 percent in the manufacturing sector to 741,395 yen but dipped 0.77 percent for nonmanufacturers to 804,706 yen, said Japan's most influential business lobby known as Nippon Keidanren.
The overall data, derived from a survey on 251 firms to which 163 disclosed their average for unionized workers, suggest that bonuses have bottomed out after registering a record 17.15 percent fall last summer amid the worldwide economic slump.
The survey covered companies in 21 industries that have a workforce of at least 500 and are traded on the First Section of the Tokyo Stock Exchange.
http://www.breitbart.com/article.php?id=D9H2MRK82&show_article=1
Japan's Provinces Are Withering Away
In the Bank of Japan's Sakura Report, a regional survey akin to the Federal Reserve's Beige Book. In the July 8 report, companies from seven of Japan's nine regions expect business to worsen in the next three months. Kanto, the region that includes metropolitan Tokyo, is the only one where business anticipates any improvement.
If the economy consisted solely of urban areas like Tokyo, Osaka, and Nagoya, things would look better.
Tokyo's unemployment rate is a few notches below the national average of 5.2 percent and well below the 8 percent recorded in the north. While the young flee rural Japan, Tokyo's population has grown by 1 million in the last decade. The economy of Tokyo and its surrounding areas generates 31 percent of GDP. Factory jobs are disappearing throughout Japan as the country's multinationals shift production abroad. Still, Japan's big companies are expected to stay based in Tokyo, where the service industry is strongest and the talent pool deepest. "The disparity is widening," says economist Tamai Chino, who studies regional economies at Mizuho Research Institute.
Chino worries about the impact of the drive to cut the national deficit. Local governments rely on funds generated by taxpayers in Tokyo, a reliance that discouraged independence in the regions, according to Martin Schulz, a senior research fellow in Tokyo at Fujitsu Research Institute. "They never saw the [need] to develop their own business models, their own products, their own bridge to global markets," he says. In the July 11 upper house elections, rural voters punished Prime Minister Naoto Kan for slashing public works. With the deficit so huge, though, the cutbacks are likely to continue. For places like Atami, revival will just be harder.
The bottom line: The gap between Tokyo and rural Japan is growing ever wider. Budget cuts will accelerate rural decline.
http://www.businessweek.com/magazine/content/10_30/b4188015313146.htm
If the economy consisted solely of urban areas like Tokyo, Osaka, and Nagoya, things would look better.
Tokyo's unemployment rate is a few notches below the national average of 5.2 percent and well below the 8 percent recorded in the north. While the young flee rural Japan, Tokyo's population has grown by 1 million in the last decade. The economy of Tokyo and its surrounding areas generates 31 percent of GDP. Factory jobs are disappearing throughout Japan as the country's multinationals shift production abroad. Still, Japan's big companies are expected to stay based in Tokyo, where the service industry is strongest and the talent pool deepest. "The disparity is widening," says economist Tamai Chino, who studies regional economies at Mizuho Research Institute.
Chino worries about the impact of the drive to cut the national deficit. Local governments rely on funds generated by taxpayers in Tokyo, a reliance that discouraged independence in the regions, according to Martin Schulz, a senior research fellow in Tokyo at Fujitsu Research Institute. "They never saw the [need] to develop their own business models, their own products, their own bridge to global markets," he says. In the July 11 upper house elections, rural voters punished Prime Minister Naoto Kan for slashing public works. With the deficit so huge, though, the cutbacks are likely to continue. For places like Atami, revival will just be harder.
The bottom line: The gap between Tokyo and rural Japan is growing ever wider. Budget cuts will accelerate rural decline.
http://www.businessweek.com/magazine/content/10_30/b4188015313146.htm
May - Economic fears causes Japan machinery order drop
A key indicator of Japanese corporate capital spending fell the most since 2008 in May, data showed Thursday, in a fresh sign that a fragile economic recovery may be losing momentum.
Japan's core private-sector machinery orders dropped 9.1 percent in May from the previous month as firms held back on business investment, the steepest decline since August 2008.
"Firms are not likely to add to their business investment actively in the near term as there is still the risk that (Japan's) economic growth will be hampered due to a possible slowdown in overseas economies," said Norio Miyagawa, economist at Mizuho Securities Research & Consulting.
The fall in the volatile indicator was the first decline in three months and much larger than the median forecast of a 3.0 percent decline in a survey of economists by Dow Jones Newswires and the Nikkei business daily.
Orders rose 4.0 percent in April compared with the previous month.
Exports have driven a recovery from recession by the world's second largest economy, but companies have eyed economic woes in Europe with concern.
The safe-haven yen has soared in recent months due to worries about the global economy, particularly Europe, which if continued will dent companies' repatriated profits and make their goods more expensive overseas.
A Bank of Japan survey last week showed that Japanese business confidence had turned optimistic for the first time since June 2008 as the corporate view of the economy improves.
But the latest data indicates that companies are worried about Japan's vulnerability to a global slowdown, say analysts.
Japan's domestic picture also remains fragile. Unemployment surprisingly edged higher in May to 5.2 percent, raising concerns about the country's ability to cultivate a self-sustaining recovery.
A separate report Thursday showed that Japan's current account surplus in May shrank for the first time in 10 months, hit by slower export growth and a drop in income on overseas investment, the finance ministry said.
The surplus in the current account -- the broadest measure of trade with the rest of the world -- came to 1.21 trillion yen (13.7 billion dollars), down by 8.1 percent from a year ago.
The trade surplus edged down 0.6 percent to 391.0 billion yen with exports rising 33.8 percent against a 37.8 percent rise in imports.
Despite remaining cautious about the impact of Europe's recent sovereign debt crisis on the global economy, Bank of Japan governor Masaaki Shirakawa said Thursday that Japan's domestic economy still showed signs of moderate recovery
http://www.google.com/hostednews/afp/article/ALeqM5gehCjrNU5pVaWNdYE03RzM6nA7Aw
Japan's core private-sector machinery orders dropped 9.1 percent in May from the previous month as firms held back on business investment, the steepest decline since August 2008.
"Firms are not likely to add to their business investment actively in the near term as there is still the risk that (Japan's) economic growth will be hampered due to a possible slowdown in overseas economies," said Norio Miyagawa, economist at Mizuho Securities Research & Consulting.
The fall in the volatile indicator was the first decline in three months and much larger than the median forecast of a 3.0 percent decline in a survey of economists by Dow Jones Newswires and the Nikkei business daily.
Orders rose 4.0 percent in April compared with the previous month.
Exports have driven a recovery from recession by the world's second largest economy, but companies have eyed economic woes in Europe with concern.
The safe-haven yen has soared in recent months due to worries about the global economy, particularly Europe, which if continued will dent companies' repatriated profits and make their goods more expensive overseas.
A Bank of Japan survey last week showed that Japanese business confidence had turned optimistic for the first time since June 2008 as the corporate view of the economy improves.
But the latest data indicates that companies are worried about Japan's vulnerability to a global slowdown, say analysts.
Japan's domestic picture also remains fragile. Unemployment surprisingly edged higher in May to 5.2 percent, raising concerns about the country's ability to cultivate a self-sustaining recovery.
A separate report Thursday showed that Japan's current account surplus in May shrank for the first time in 10 months, hit by slower export growth and a drop in income on overseas investment, the finance ministry said.
The surplus in the current account -- the broadest measure of trade with the rest of the world -- came to 1.21 trillion yen (13.7 billion dollars), down by 8.1 percent from a year ago.
The trade surplus edged down 0.6 percent to 391.0 billion yen with exports rising 33.8 percent against a 37.8 percent rise in imports.
Despite remaining cautious about the impact of Europe's recent sovereign debt crisis on the global economy, Bank of Japan governor Masaaki Shirakawa said Thursday that Japan's domestic economy still showed signs of moderate recovery
http://www.google.com/hostednews/afp/article/ALeqM5gehCjrNU5pVaWNdYE03RzM6nA7Aw
Summer Travelers Aborad to rise 8%
Japanese overseas travelers on summer vacation this year may rise 8.4 percent from the previous year to 2.44 million due to the nation's economic recovery and the yen's appreciation against other currencies, travel agency JTB Corp. forecast Friday.
Overseas summer travel demand between mid-July and the end of August is thus expected to increase for the second consecutive year.
By destination, the number of travelers to China is estimated to increase 14.8 percent to 418,000 due to the ongoing Shanghai World Expo. Those bound for South Korea may number 408,000, up 9.7 percent.
But travelers to Thailand are expected to decline 24.1 percent to 82,000 due to the recent antigovernment riots.
Hawaii-bound travelers are projected at 180,000, up 10.4 percent. Those traveling to Europe are estimated to increase 6.2 percent to 345,000.
http://search.japantimes.co.jp/cgi-bin/nb20100703a5.html
Overseas summer travel demand between mid-July and the end of August is thus expected to increase for the second consecutive year.
By destination, the number of travelers to China is estimated to increase 14.8 percent to 418,000 due to the ongoing Shanghai World Expo. Those bound for South Korea may number 408,000, up 9.7 percent.
But travelers to Thailand are expected to decline 24.1 percent to 82,000 due to the recent antigovernment riots.
Hawaii-bound travelers are projected at 180,000, up 10.4 percent. Those traveling to Europe are estimated to increase 6.2 percent to 345,000.
http://search.japantimes.co.jp/cgi-bin/nb20100703a5.html
June - Department Store Sales Fall
All major department store chains have reported year-on-year sales drops on a same-store basis for June, partly because consumers were slow in buying midyear gifts and heavy rain reduced consumer traffic in western Japan.
Among them, Takashimaya Co. sales fell 5.5 percent.
This came after recording the first year-on-year gain in 26 months in May. While jewelry and some seasonal goods sold well, sales of clothing and sundry goods fell.
J. Front Retailing Co. said its Daimaru and Matsuzakaya chains saw a 2.5 percent sales decrease after an increase in May as midyear gift sales were sluggish. A large-scale refurbishment at the Daimaru Umeda store in Osaka also affected sales.
Isetan Mitsukoshi Holdings Ltd. reported a 12.0 percent sales drop for its Mitsukoshi chain and a 2.3 percent fall for its Isetan chain. The Mitsukoshi chain suffered heavy drops at its Takamatsu, Kagawa Prefecture, and Matsuyama, Ehime Prefecture, stores as they were hit by heavy rain in June.
http://search.japantimes.co.jp/cgi-bin/nb20100703a6.html
Among them, Takashimaya Co. sales fell 5.5 percent.
This came after recording the first year-on-year gain in 26 months in May. While jewelry and some seasonal goods sold well, sales of clothing and sundry goods fell.
J. Front Retailing Co. said its Daimaru and Matsuzakaya chains saw a 2.5 percent sales decrease after an increase in May as midyear gift sales were sluggish. A large-scale refurbishment at the Daimaru Umeda store in Osaka also affected sales.
Isetan Mitsukoshi Holdings Ltd. reported a 12.0 percent sales drop for its Mitsukoshi chain and a 2.3 percent fall for its Isetan chain. The Mitsukoshi chain suffered heavy drops at its Takamatsu, Kagawa Prefecture, and Matsuyama, Ehime Prefecture, stores as they were hit by heavy rain in June.
http://search.japantimes.co.jp/cgi-bin/nb20100703a6.html
June - Tankan Rises - 1st time in 2 years
In the Bank of Japan's quarterly "tankan" survey of business sentiment, the diffusion index for large manufacturers has risen to 1 in June -- the first time in two years a positive figure has been registered.
The mark was 15 points above the level recorded during the previous survey three months earlier, and it was the fifth consecutive quarter for the index to rise. The last time positive figures were registered was in June 2008, prior to the Lehman Shock that rocked the global economy.
The business confidence index among major non-manufacturers, meanwhile, rose 9 points to minus 5 -- the fifth consecutive quarter of improvement. The figures indicate that economic recovery that has been led by foreign demand and supported by exports to emerging countries is now spreading with a boost in domestic demand.
At the same time, however, concerns are also spreading over credit uncertainties in Europe, an economic slowdown in China and the U.S., and a strong yen, among other issues, and the path toward full-scale economic recovery remains rocky.
The diffusion index is calculated by subtracting the proportion of companies who say that the economy is bad from the proportion who say it is good.
It has been predicted that the index in the tankan survey in June would come to minus 4, but exports boosted the figure for manufacturers to a positive level.
"The economies of emerging countries were better than expected," a Bank of Japan official commenting on the index said.
Mazda President Takashi Yamauchi on July 1 said that sales between April and May were up 20 percent from the same period last year. Due to tax breaks for eco-cars and other factors, domestic sales increased 30 percent. The president, speaking at an event in Tokyo to introduce new vehicles, added that the company also saw sales increases of 20 percent in North America, more than 20 percent in China, and more than 40 percent in Southeast Asia.
In emerging countries, demand for flat-screen television sets has also surged, resulting in shortages of parts. As a result, Panasonic, which had planned sales of a 42-inch television set in June, has delayed release until September.
Responding to the recovery among manufacturers of vehicles, electronics and production machinery, capital investment -- which had been moving slowly -- is starting to pick up.
In the June tankan survey, major manufacturers indicated that they intended to increase capital spending in plants and equipment in fiscal 2010 by 3.8 percent compared with the previous year -- the first time in three years that the figure has been positive. The recovery, boosted by foreign demand and centered on export-related firms, is now also being seen among non-manufacturers.
http://mdn.mainichi.jp/mdnnews/news/20100702p2a00m0na021000c.html
The mark was 15 points above the level recorded during the previous survey three months earlier, and it was the fifth consecutive quarter for the index to rise. The last time positive figures were registered was in June 2008, prior to the Lehman Shock that rocked the global economy.
The business confidence index among major non-manufacturers, meanwhile, rose 9 points to minus 5 -- the fifth consecutive quarter of improvement. The figures indicate that economic recovery that has been led by foreign demand and supported by exports to emerging countries is now spreading with a boost in domestic demand.
At the same time, however, concerns are also spreading over credit uncertainties in Europe, an economic slowdown in China and the U.S., and a strong yen, among other issues, and the path toward full-scale economic recovery remains rocky.
The diffusion index is calculated by subtracting the proportion of companies who say that the economy is bad from the proportion who say it is good.
It has been predicted that the index in the tankan survey in June would come to minus 4, but exports boosted the figure for manufacturers to a positive level.
"The economies of emerging countries were better than expected," a Bank of Japan official commenting on the index said.
Mazda President Takashi Yamauchi on July 1 said that sales between April and May were up 20 percent from the same period last year. Due to tax breaks for eco-cars and other factors, domestic sales increased 30 percent. The president, speaking at an event in Tokyo to introduce new vehicles, added that the company also saw sales increases of 20 percent in North America, more than 20 percent in China, and more than 40 percent in Southeast Asia.
In emerging countries, demand for flat-screen television sets has also surged, resulting in shortages of parts. As a result, Panasonic, which had planned sales of a 42-inch television set in June, has delayed release until September.
Responding to the recovery among manufacturers of vehicles, electronics and production machinery, capital investment -- which had been moving slowly -- is starting to pick up.
In the June tankan survey, major manufacturers indicated that they intended to increase capital spending in plants and equipment in fiscal 2010 by 3.8 percent compared with the previous year -- the first time in three years that the figure has been positive. The recovery, boosted by foreign demand and centered on export-related firms, is now also being seen among non-manufacturers.
http://mdn.mainichi.jp/mdnnews/news/20100702p2a00m0na021000c.html
2009 - Land Prices Fall 8%
Land prices sank by an average of 8.0 percent in 2009 as the rise in office vacancies following the global financial crisis threw cold water on the real estate market, the National Tax Agency said Thursday.
As of Jan. 1, the price of land in Japan had fallen in all 47 prefectures to an average of ¥126,000 per sq. meter, the agency said, or 2.5 points greater than in 2008, when prices also fell nationwide.
These "roadside land prices" are announced each year by the tax agency after it assesses some 380,000 benchmark points across the nation to calculate taxes.
Prices dropped faster in the nation's three top urban centers. The Tokyo region posted the deepest decline, of 9.7 percent, compared with 6.5 percent the previous year.
The Osaka region, however, accelerated its plunge to 8.3 percent from 3.4 percent the previous year, while the Nagoya region fell a slower 7.6 percent, compared with 6.3 percent in 2008.
In the other regions, prices fell 5.9 percent, accelerating from 3.8 percent the previous year.
In the 47 prefectural capitals, 45 logged falling prices, with Tokyo and Nagoya saying prices fell by more than 20 percent.
Only two prefectural capitals — Mie's Tsu and Yamaguchi — saw prices stay unchanged.
A plot of famed Ginza stationary store Kyukyodo in Tokyo retained its title as the nation's most expensive patch of land for the 25th year in a row, but its ¥23.2 million per sq. meter price tag has plunged 25.6 percent in the past year.
The price for the Kyukyodo plot peaked at ¥36.5 million in 1992 and bottomed out at ¥11.36 million in 1997.
http://search.japantimes.co.jp/cgi-bin/nb20100702a1.html
As of Jan. 1, the price of land in Japan had fallen in all 47 prefectures to an average of ¥126,000 per sq. meter, the agency said, or 2.5 points greater than in 2008, when prices also fell nationwide.
These "roadside land prices" are announced each year by the tax agency after it assesses some 380,000 benchmark points across the nation to calculate taxes.
Prices dropped faster in the nation's three top urban centers. The Tokyo region posted the deepest decline, of 9.7 percent, compared with 6.5 percent the previous year.
The Osaka region, however, accelerated its plunge to 8.3 percent from 3.4 percent the previous year, while the Nagoya region fell a slower 7.6 percent, compared with 6.3 percent in 2008.
In the other regions, prices fell 5.9 percent, accelerating from 3.8 percent the previous year.
In the 47 prefectural capitals, 45 logged falling prices, with Tokyo and Nagoya saying prices fell by more than 20 percent.
Only two prefectural capitals — Mie's Tsu and Yamaguchi — saw prices stay unchanged.
A plot of famed Ginza stationary store Kyukyodo in Tokyo retained its title as the nation's most expensive patch of land for the 25th year in a row, but its ¥23.2 million per sq. meter price tag has plunged 25.6 percent in the past year.
The price for the Kyukyodo plot peaked at ¥36.5 million in 1992 and bottomed out at ¥11.36 million in 1997.
http://search.japantimes.co.jp/cgi-bin/nb20100702a1.html
Chinese tourists flock to Japan, lift weak economy
Japan's languishing economy is getting a lift from hundreds of thousands of Chinese tourists who are eager to flaunt their newfound wealth by purchasing brand name goods, from Canon digital cameras to Shiseido cosmetics.
Last year, a record 481,696 Chinese tourists visited Japan, up nearly 20 percent from 2007, according to the Japan National Tourism Organization. While it's difficult to measure the precise impact of Chinese tourist spending, it is warmly welcomed by Japan's struggling retailers.
As Japan's population ages and declines, the world's No. 2 economy will become increasingly dependent on such consumer spending from those who live outside the country — and Tokyo knows it.
Japan will ease tourist visa restrictions on July 1 for mainland Chinese citizens, hoping to draw more visitors — and their big wallets.
Thanks to years of rapid growth, China now has the world's fourth largest population of millionaires after the United States, Japan and Germany, according to a Merrill Lynch Wealth Management/Capgemini survey.
To cash in on China's rising wealth, Tokyo will start to issue tourist visas to Chinese who hold gold cards — credit cards granted to those above a certain income level with good credit histories — or who earn more than 60,000 yuan ($8,800) annually.
That's down sharply from a previous income requirement of 250,000 yuan ($37,000) per year, a threshold that apparently was imposed to keep low-income earners from staying on and becoming illegal aliens.
The revised income requirement is still well above the average income for a Chinese city dweller — 19,000 yuan ($2,800) last year.
For Chinese tourists, shopping is the most popular activity while in Japan.
http://www.google.com/hostednews/ap/article/ALeqM5hbo1xSifyRFYI3LW95Zfu_4u-drwD9GKOE8G0
Last year, a record 481,696 Chinese tourists visited Japan, up nearly 20 percent from 2007, according to the Japan National Tourism Organization. While it's difficult to measure the precise impact of Chinese tourist spending, it is warmly welcomed by Japan's struggling retailers.
As Japan's population ages and declines, the world's No. 2 economy will become increasingly dependent on such consumer spending from those who live outside the country — and Tokyo knows it.
Japan will ease tourist visa restrictions on July 1 for mainland Chinese citizens, hoping to draw more visitors — and their big wallets.
Thanks to years of rapid growth, China now has the world's fourth largest population of millionaires after the United States, Japan and Germany, according to a Merrill Lynch Wealth Management/Capgemini survey.
To cash in on China's rising wealth, Tokyo will start to issue tourist visas to Chinese who hold gold cards — credit cards granted to those above a certain income level with good credit histories — or who earn more than 60,000 yuan ($8,800) annually.
That's down sharply from a previous income requirement of 250,000 yuan ($37,000) per year, a threshold that apparently was imposed to keep low-income earners from staying on and becoming illegal aliens.
The revised income requirement is still well above the average income for a Chinese city dweller — 19,000 yuan ($2,800) last year.
For Chinese tourists, shopping is the most popular activity while in Japan.
http://www.google.com/hostednews/ap/article/ALeqM5hbo1xSifyRFYI3LW95Zfu_4u-drwD9GKOE8G0
May - unemployment rises as output slows
Japan's unemployment rate rose unexpectedly in May as household consumption fell and factory production declined, illustrating the fragile nature of Japan's gradual recovery from recession.
The unemployment rate edged higher in May to 5.2 percent, rising by 0.1 percentage points from the previous month, government data showed Tuesday.
The rate fell below market expectations of 5.0 percent forecast by economists surveyed by Dow Jones Newswires.
It was the 28th consecutive monthly decline in the number of people in employment, the government said, with the workforce now standing 470,000 lower than a year earlier.
Average household consumption also fell unexpectedly in May by 0.7 percent on-year, the government said, defying expectations of a 0.5 percent rise as weak domestic demand continues to burden the Japanese economy.
Crippling deflation, and weak domestic demand continue to weigh on growth as consumers defer purchases in the hope of further price falls. The government has said it aims to end deflation by fiscal 2011.
Factory output was down 0.1 percent on month in May, the first drop in three months following a 1.3 percent gain in April.
The latest data may raise concerns about Japan's output growth in the months ahead, given a recent slowdown in export growth amid anxieties over both the impact of global stimulus withdrawal and European debt on exports.
http://news.yahoo.com/s/afp/20100629/bs_afp/japaneconomy_20100629012551
The unemployment rate edged higher in May to 5.2 percent, rising by 0.1 percentage points from the previous month, government data showed Tuesday.
The rate fell below market expectations of 5.0 percent forecast by economists surveyed by Dow Jones Newswires.
It was the 28th consecutive monthly decline in the number of people in employment, the government said, with the workforce now standing 470,000 lower than a year earlier.
Average household consumption also fell unexpectedly in May by 0.7 percent on-year, the government said, defying expectations of a 0.5 percent rise as weak domestic demand continues to burden the Japanese economy.
Crippling deflation, and weak domestic demand continue to weigh on growth as consumers defer purchases in the hope of further price falls. The government has said it aims to end deflation by fiscal 2011.
Factory output was down 0.1 percent on month in May, the first drop in three months following a 1.3 percent gain in April.
The latest data may raise concerns about Japan's output growth in the months ahead, given a recent slowdown in export growth amid anxieties over both the impact of global stimulus withdrawal and European debt on exports.
http://news.yahoo.com/s/afp/20100629/bs_afp/japaneconomy_20100629012551
May - Growth in Japan retail sales slackens
Japan's retail sales expanded for the fifth straight month in May, though growth in spending lost momentum as government stimulus measures fade.
Retail sales rose 2.8 per cent from the same month a year earlier, the government said Monday.
The result compares with gains of almost 5 per cent in both March and April and marks the slowest growth since January.
Compared with the previous month, retails sales in May fell a seasonally adjusted 2 per cent in the first decline in five months.
Autos and household machinery sales were particularly weak, reflecting the waning effects of consumer incentives for cars and energy-efficient home appliances.
Despite the latest figure, economists say they expect consumer spending to stay solid in the months ahead as Japan's economy improves.
Robust exports have led to higher corporate profits and factory production, which is gradually filtering down to workers and households.
"Looking ahead, we believe that underlying trend of consumption will remain firm with a gradual improvement in labour market and wages," said Masamichi Adachi, senior economist at JPMorgan Securities Japan, in a note to clients.
Sales at large retail stores fell 4 per cent from a year earlier, after adjusting for the change in the number of stores, according to the Ministry of Economy, Trade and Industry.
http://news.smh.com.au/breaking-news-business/growth-in-japan-retail-sales-slackens-20100628-ze41.html
Retail sales rose 2.8 per cent from the same month a year earlier, the government said Monday.
The result compares with gains of almost 5 per cent in both March and April and marks the slowest growth since January.
Compared with the previous month, retails sales in May fell a seasonally adjusted 2 per cent in the first decline in five months.
Autos and household machinery sales were particularly weak, reflecting the waning effects of consumer incentives for cars and energy-efficient home appliances.
Despite the latest figure, economists say they expect consumer spending to stay solid in the months ahead as Japan's economy improves.
Robust exports have led to higher corporate profits and factory production, which is gradually filtering down to workers and households.
"Looking ahead, we believe that underlying trend of consumption will remain firm with a gradual improvement in labour market and wages," said Masamichi Adachi, senior economist at JPMorgan Securities Japan, in a note to clients.
Sales at large retail stores fell 4 per cent from a year earlier, after adjusting for the change in the number of stores, according to the Ministry of Economy, Trade and Industry.
http://news.smh.com.au/breaking-news-business/growth-in-japan-retail-sales-slackens-20100628-ze41.html
May - Consumer Prices fall for 15th Month
Japan says consumer prices fell for the 15th straight month in May as deflation kept its grip.
The core consumer price index, which excludes fresh food, fell 1.2 percent from a year earlier.
The result compares Kyodo news agency's average market forecast for a 1.3 percent decline.
http://news.yahoo.com/s/ap/20100624/ap_on_bi_ge/as_japan_economy_3
The core consumer price index, which excludes fresh food, fell 1.2 percent from a year earlier.
The result compares Kyodo news agency's average market forecast for a 1.3 percent decline.
http://news.yahoo.com/s/ap/20100624/ap_on_bi_ge/as_japan_economy_3
May - Exports Rise for 6th Straight Month
Japan's exports expanded for a sixth straight month in May as brisk global demand for cars and high-tech products helped shore up a recovery.
The finance ministry said that exports rose 32.1 percent from a year earlier to 5.3 trillion yen ($59 billion), marking the sixth month of year-on-year increase.
Growth in exports is vital to Japan's economy as exports alone account for 10 percent of the nation's gross domestic product.
Robust global demand, particularly in Asia, is supporting growth in Japanese exports and fueling an economic recovery. Japan recently upgraded its growth forecast to 2.6 percent in the current fiscal year thanks to an upturn in exports.
Among key regions, Japan's exports to Asia jumped 34.4 percent in May, marking the seventh consecutive month of year-on-year increase. Asia-bound shipments alone accounted for nearly 60 percent of Japan's total exports in the month.
Japan's auto exports to Asia expanded 56 percent while steel shipments to the region soared 78.8 percent in May.
Japan's exports to China also rose 25.3 percent, lifted by rising demand for cars and steel products.
Meanwhile, the country's exports to the United States grew 17.7 percent on recovering demand for cars. U.S.-bound auto exports rose 23.4 percent in May, with auto parts shipments to the United States up 40 percent.
Japanese exports to the European Union rose 17.4 percent last month.
Imports in May grew 33.4 percent to 5.0 trillion yen, resulting in a trade surplus of 324 billion yen.
http://www.forbes.com/feeds/ap/2010/06/23/business-as-japan-economy_7715462.html?feed=rss_asia
The finance ministry said that exports rose 32.1 percent from a year earlier to 5.3 trillion yen ($59 billion), marking the sixth month of year-on-year increase.
Growth in exports is vital to Japan's economy as exports alone account for 10 percent of the nation's gross domestic product.
Robust global demand, particularly in Asia, is supporting growth in Japanese exports and fueling an economic recovery. Japan recently upgraded its growth forecast to 2.6 percent in the current fiscal year thanks to an upturn in exports.
Among key regions, Japan's exports to Asia jumped 34.4 percent in May, marking the seventh consecutive month of year-on-year increase. Asia-bound shipments alone accounted for nearly 60 percent of Japan's total exports in the month.
Japan's auto exports to Asia expanded 56 percent while steel shipments to the region soared 78.8 percent in May.
Japan's exports to China also rose 25.3 percent, lifted by rising demand for cars and steel products.
Meanwhile, the country's exports to the United States grew 17.7 percent on recovering demand for cars. U.S.-bound auto exports rose 23.4 percent in May, with auto parts shipments to the United States up 40 percent.
Japanese exports to the European Union rose 17.4 percent last month.
Imports in May grew 33.4 percent to 5.0 trillion yen, resulting in a trade surplus of 324 billion yen.
http://www.forbes.com/feeds/ap/2010/06/23/business-as-japan-economy_7715462.html?feed=rss_asia
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