Insider Trading Scandal Claims Nomura Bosses

The biggest management shake-up at Nomura Holdings in a decade and a half was orchestrated by the bank's chairman with the secrecy and precision of a military operation.

The closely guarded timing of Thursday's announcement that Chief Executive Kenichi Watanabe was quitting stunned senior managers at Japan's top investment bank. Watanabe, 59, had vowed only a month ago to ride out an insider trading scandal.

Behind the scenes, pressure had been building on Watanabe for weeks to resign from a bank that is at the centre of Japan's capital markets, people with knowledge of the matter said.

Eventually, Chairman Nobuyuki Koga, 61, pushed Watanabe to go in an effort to appease regulators and end an escalating probe that was costing the bank new business, according to people familiar with talks between Nomura and Japan's Financial Services Agency (FSA).

Nomura has acknowledged staff from its institutional sales team leaked information on three Japanese share issues to clients in 2010. The bank has been caught up in a wider crackdown on tip-offs ahead of share offerings in Japan that has implicated several other brokers and fund management firms. Nomura warned on Thursday that more cases from inside the bank could emerge.

Analysts say the departure of Watanabe and Chief Operating Officer Takumi Shibata raises questions about the bank's commitment to overseas markets since both men were the architects of Nomura's troubled acquisition of Lehman Brothers' business in Europe and Asia in 2008.

Nomura has struggled to integrate the bankrupt Wall Street firm and has since scaled back its global expansion plans, hit by the same headwinds buffeting other investment banks. Its stock has lost three-fourths of its value since the acquisition. Watanabe's replacement, Koji Nagai, said on Thursday he would not dismantle the global franchise but would carry out a review to find the "appropriate size" for the bank.

For many inside Nomura the question was simpler: How did things unravel so fast for Watanabe?

Nomura declined to comment on the events leading to Watanabe's resignation. Neither Koga nor Watanabe could be reached for comment on this article.

MANAGERS SUMMONED TO EMERGENCY MEETING

Although Watanabe had begun talking within the bank since May about management changes, many inside Nomura believed he intended to remain CEO until early 2013, a compromise that would allow him to retire at 60 rather than resign early.

At 3 a.m. on Thursday, the day of a scheduled board meeting, top managers were sent an email ordering them to an emergency meeting in a few hours time. The reason was not disclosed, but one hour earlier the Nikkei newspaper had broken the news on its website: Watanabe was out.

With the exception of a handful of people closest to Watanabe and Nagai, the shake-up came as a shock, senior executives told Reuters. By the time reporters arrived at Watanabe's house in Chiba outside Tokyo just after dawn, a security guard was in place to tell them he was not at home.

"I had no idea," one high-level executive said.

Later that day, Watanabe told a news conference he had decided to resign after setting up a new compliance system intended to stop further breaches of confidential information from the bank's underwriting department.

But a more nuanced picture emerges from interviews with 10 regulatory and company sources about the tension-filled weeks that preceded Watanabe's announcement as the cost of the scandal grew and Koga opened a backchannel to regulators.

In the past two months, at least nine Japanese issuers have dropped or demoted Nomura as a bond or stock underwriter.

That included Nomura's relegation to a lesser role in the $8 billion initial public offering of Japan Airlines (JAL), which will be the world's second biggest this year after Facebook's $16 billion IPO. Nomura had been working on the JAL deal as a global coordinator for a year when the decision was made. JAL has declined to comment on the matter.

"KOGA WRAPPED IT ALL UP FOR US" - FSA OFFICIAL

Against that backdrop, Koga, the chairman, stepped forward to smooth Nomura's ties with the FSA and head off costlier sanctions, which could range from an order to improve compliance to a damaging suspension of some operations for weeks, sources with knowledge of the situation said.

Koga, who had been Nomura chief executive for five years before handing the reins to Watanabe in 2008, also led the decision to appoint Nagai as CEO and Atsushi Yoshikawa, Nomura's head of U.S. operations, as COO, sources said. The reshuffle contained a key provision -- Watanabe would stay on as an advisor but not get involved in decisions made by the new team.

"Koga wrapped it all up for us," a senior FSA official told Reuters, speaking on condition that he not be identified.

The insider trading scandal was not the only reason regulators wanted fresh leadership at Nomura. Some senior FSA officials and company executives felt Watanabe and Shibata should be held accountable for pursuing a global expansion that hurt the bank's earnings, sources said.

Watanabe had called the Lehman deal a "once in a generation opportunity" in 2008. By 2011, markets had turned against him and he launched a $1.2 billion cost-cutting drive, mainly targeting the ailing European operations.

There are still Nomura executives who believe the logic behind the deal was sound. Watanabe's supporters say it would have been difficult to predict the extent of the European debt crisis and how tough industry conditions would become.

"Among Japanese financial institutions he was the only leader who really had the ambition to build a global franchise," one person close to Watanabe said. "I really wanted him to succeed."

KOGA'S RESPONSE SHAPED BY PAST

In the late 1990s, Koga was Nomura's liaison to the Finance Ministry and learned about the importance of dealing carefully with Japan's powerful bureaucracy.

In 1997, Koga watched then chairman Masashi Suzuki navigate a scandal triggered by Nomura's admission that it had made illegal payments to a gangster to stop him causing trouble at a shareholders' meeting in 1995.

Suzuki took over temporarily as president and in one month mapped out a response that included the resignation of 15 senior executives as well as his own.

"Chairman Koga was close to this when it all went down. I think he learned what you have to do to get over a crisis," said an executive at a Nomura group firm.

In May, Koga formed a small team of executives, including Shoichi Nagamatsu, who would soon be drafted to oversee the bank's compliance efforts. Over the coming weeks, Koga made several trips to the FSA, the sources said.

As early as March, some senior officials in the FSA and the Securities and Exchange Surveillance Commission (SESC), which is handling the insider trading investigation, had called privately for Watanabe's dismissal.

In addition to stonewalling on the probe, the sources said, Watanabe appeared to eschew protocol in dealing with regulators.

He annoyed regulators for not alerting them of his plan to name Nagai as the new brokerage unit head and then later in March by not paying a courtesy call on then Financial Services Minister Shozaburo Jimi after the first case implicating Nomura was announced, regulatory and banking sources said.

The FSA does not have the legal power to force management changes but has previously used its influence to oust executives. Watanabe's departure would seem to make it less likely Nomura will face harsh penalties when sanctions are announced in the coming weeks, regulatory sources said.

THE INVESTIGATION CONTINUES

By May, Watanabe had started telling others inside Nomura he was willing to quit if that would resolve the crisis, sources said then.

Pressure to take that step mounted as the investigation expanded and it became apparent Nomura might have to acknowledge its involvement in a wider range of cases.

Since late April, SESC investigators had been inside Nomura, working on the 14th floor of the brokerage's office in Otemachi. Their target was the kind of leak that had become widespread in Tokyo by 2010 when many companies issued new shares to recapitalize. Information on those issues, which dilute the stakes of existing shareholders, had begun to leak to investors who profited by shorting, or selling the shares, market participants and regulators say.

Nomura has said it was involved in leaks of information on three issues in 2010: by Mizuho Financial Group, energy firm Inpex Corp and Tokyo Electric Power.

At the time it was underwriting those share offerings, Nomura's institutional equity sales department was split into two groups -- one responsible for mainly long-only fund management companies and the other for hedge funds.

The early phase of the SESC's probe and Nomura's own internal investigation had focused on the division handling buy-and-hold style fund managers. But as the SESC investigation moved into July, the focus shifted to hedge funds.

On June 29, Nomura published the results of the internal investigation led by outside attorneys that detailed sweeping breaches of internal controls and a raft of measures aimed at preventing further leaks of confidential information.

On the same day, hedge fund Japan Advisory was fined for insider trading, allegedly on a tip provided by Daiwa Securities Group. After that, the FSA ordered all brokers with big underwriting desks to report back on their dealings with Japan Advisory, which regulators believed was paying brokers outsized commissions in return for tips.

Those reports are due to be filed with the FSA by August 3.

That directive put the spotlight on the brokers who worked closely with Japan Advisory and its head, Edward Brogan. Industry sources have said Nomura was one of the banks competing for Brogan's business.

Japan Advisory has declined to comment on its case. Brogan has not returned e-mails and phone calls seeking comment. Daiwa Securities announced on Friday that its own investigation found a former employee had tipped off Japan Advisory but that such leaks were not orchestrated by the brokerage.

In an update to its internal investigation, Nomura said on Thursday there was a "high possibility" its sales staff had leaked inside information on other issues beyond the three in 2010. While Nomura said in the report that it had not identified any cases involving hedge funds, a review of e-mails, chats and phone calls revealed "suspicious contacts" with clients ahead of public share offerings.

As time wore on, the stress on Watanabe grew.

At the June 29 news conference when he insisted he would keep his job, Watanabe appeared sullen and withdrawn.

"I think he was tired. The last one to two months have been grueling," the person close to him said.

His resignation on Thursday was met with relief by investors and regulators. Shares in Nomura, which had lost more than a third of their value since mid-March when the SESC announced the first case implicating the bank, are up 11 percent.

"We hope the reborn Nomura will make a fresh start," Financial Services Minister Tadahiro Matsushita told reporters on Friday.




http://www.chicagotribune.com/business/sns-rt-us-japan-nomurabre86s04h-20120729,0,5777520.story?page=1

Anti Yakuza Laws Being to Bite VII - Reducing Street Vendors at Matsuri

Changes are afoot at this year’s traditional summer festivals held in the Kansai area, reports Shukan Jitsuwa (Aug. 2). Recently enacted anti-organized crime ordinances have significantly reduced the number of street vendors often present at these traditional events.

Nationwide legislation that prohibits ordinary citizens from having business dealings with criminal organizations was enacted last October. In April 2011, a special mandate regarding the exclusion of gangsters was passed in Kyoto Prefecture.

During the period between July 14 and 17 of this year’s Gion Festival, held in the famed geisha quarter of Kyoto, the Gojo Roten Kumiai vending association estimated that there were 200 fewer stalls in the streets in comparison to last year. The stalls typically sell everything from grilled chicken to ice-cold beer.

Such a decline is attributed to a motion on June 22 of the Kyoto Gion Matsuri Yamaboku Rengokai volunteer organization, which vowed not to fear, utilize, or give money to organize crime groups, which notoriously back street-vending activities. The Kyoto Prefectural Police in turn limited the number of street stalls at the event.

“While the police say it is taking such measures to reduce crowd-related accidents it is evident that the intention is to eliminate merchants making a living through these shops,” says a journalist on the police beat. “Regarding concerns about ensuring crowd safety, control measures implemented two years ago are sufficient. The real intent is to get rid of organized-crime-related merchants.”

Vendors were not pleased. “The regulation blocked us from having our street shop,” says a merchant whose festival booth goldfish scooping. “While the authorities say it is to ensure pedestrian safety,they still let establishments set up special booths in front of their regular shops. It is simply designed to eliminate us.”

Another merchant laments that the festival’s spirit is being reduced as a consequence. “While we are indeed merchants who make a living through these festivals, we are also proud of what we do and that we help in turning the festivals into lively events,” says the stall proprietor. “This is what we want to convey to the authorities.”

While these merchants are claiming to be victims, tourists on Shijo Street, the main avenue of the festival, told Shukan Jitsuwa that the change was positive as traffic flowed more swiftly and a better atmosphere resulted.

Moves to limit vendor numbers exhibiting at the Tenjin Festival, the highlight of Osaka’s summer calendar, are already underway. “The elimination of many vendors from major festivals is becoming a trend, but the real issue will be with smaller scale festivals,” says a journalist covering local news.



http://www.tokyoreporter.com/2012/07/25/goodbye-to-gangsters-at-kyotos-gion-festival/

May 2012 - 17 million Facebook Users

The latest NetRatings study from Nielsen Japan show us that Facebook is slowly rising from where it just a little over a year ago. There was only about 8 million native Japanese on Facebook in May 2011. That number has jumped to 17 million in May of 2012. That represents almost 30 percent of all Internet connected individuals in the country. 


The undisputed king of social media in Japan, Mixi, might not be king for much longer. Latest numbers showed Mixi having only about 20 million Japanese users. That’s only a 3 million difference and Facebook could easily overtake Mixi within the next few months if they haven’t already.

AllFacebook attributes the rise in Facebook popularity to the horrific tsunami and earthquake that hit Japan in March 2011. With the country’s major form of communication (cell phones) down, they took to social networking to connect with friends and family. It would also appear that more Japanese college students are using the social media site to look for work.

Facebook is going to have to look beyond the U.S. and Europe for growth now that it’s a publicly traded company. Gaining a larger foothold in Asia will definitely do wonders for their user base and might even increase revenue. Of course, there’s limited room for growth in Japan for sites like Facebook, so the company should definitely be setting its sights on China. A few deregulations here and there would really help Facebook make a splash in the highly lucrative Asian market.



http://www.webpronews.com/facebook-amasses-17-million-japanese-users-2012-07

Proposed 10% increase in Minimum Wage

A subcommittee of a labor ministry advisory panel decided Wednesday to recommend that the nation's minimum hourly wage be raised by an average of 7 yen in fiscal 2012.

The size of the proposed increase was limited to less than 10 percent for the second consecutive year but exceeded the 6 yen hike of the preceding year. If raised in line with the recommendation, the average minimum wage will go up from 737 yen to 744 yen.

The subcommittee of the Central Minimum Wages Council, which advises Labor Minister Yoko Komiyama, agreed to move toward ending cases in which the minimum wage is below the level of welfare benefits by next fiscal year in principle.

Such cases are seen in 11 prefectures at present. The proposed minimum wage hike is expected to help eliminate the phenomenon in as many as nine prefectures.

But the negative gap is not expected to be eliminated in Hokkaido, where it presently stands at 30 yen, or Miyagi Prefecture, where the current shortfall is 19 yen.

In the three northeastern prefectures hit hardest by the March 2011 earthquake and tsunami, the minimum wage was recommended to be raised by 7-10 yen in Miyagi and by 4 yen in Iwate and Fukushima.

In fiscal 2011, which ended in March, wage levels were affected by the impact of the disaster. As a result, recommended minimum wage hikes were limited to 1 yen in about 80 percent of the nation's 47 prefectures.

In the current fiscal year, however, the proposed hikes in most regions exceeds the previous year's levels, reflecting the nation's economic recovery on the back of reconstruction demand after the disaster.

In addition, wages at small firms, used as a key reference by the panel, have grown 0.2 percent in the current year from the previous year, marking the first rise in four years.

The proposed minimum wage increases in all prefectures ranged from 4 yen to 20 yen.

The recommendation will be formally decided at a meeting of the council on Thursday. Based on the decision, panels in each prefecture will decide the minimum wage levels that companies will be required to pay to workers in line with local living costs.


http://www.yomiuri.co.jp/dy/business/T120725005334.htm

Radioactive strontium detected in 10 prefectures

Radioactive strontium, thought to have been released following the Fukushima Daiichi nuclear disaster last year, has been detected in 10 prefectures across Japan, the government said Wednesday.

The Ministry of Education, Culture, Sports, Science and Technology confirmed that small amounts of radioactive strontium have been detected in Akita, Iwate, Yamagata, Ibaraki, Tochigi, Gunma, Saitama, Chiba and Kanagawa Prefectures, as well as in Tokyo, Fuji TV reported.

The ministry said that the highest detected level was in Ibaraki where readings of 6 becquerels per square meter were detected. A ministry spokesman was quoted as saying that radiation at this level has a negligible effect on human health, Fuji reported.

The government’s findings come weeks after the Tokyo Shimbun reported the Koto Association for the Protection of Children held a press conference in the Tokyo metropolitan government building on June 7, to announced the results of a survey it carried out, which showed high levels of radioactive cesium in an athletic ground near the Tobu sewage sludge processing plant in Tokyo.

The research, carried out by the association and Professor Tomoya Yamauchi of Kobe University, found cesium levels of 230,000 becquerels per square meter, an amount six times higher than the limit set for material leaving the radiation exclusion zone in Fukushima, Fuji reported.


http://www.japantoday.com/category/national/view/radioactive-strontium-detected-in-10-prefectures

June - Economy Loses Momentum As Deflation Persists

Japan's consumer prices declined in June, indicating that the country's economy continues to be affected by the soft global demand, the worsening crisis in the euro zone and the strengthening yen.


The data released Friday by Japan's Statistics Bureau show that consumer prices declined to 0.2 percent in June from the earlier year. Policymakers agree that one of the government's most important goals is to beat deflation.

A main reason for the existence of deflation in Japan is due to the shortage of demand relative to the supply capacity of the economy. The negative output gap is estimated to be 3.5 percent of the gross domestic product (GDP), meaning that the demand is around 17 trillion yen ($217 billion) less per year than the potential supply. How the government addresses this will indicate whether it can achieve the target of 3 percent nominal GDP growth per annum through 2020 with inflation of 1 percent, meaning that the economy should achieve a 2 percent annual real growth.


Policymakers feel that deregulation can help along with the Bank of Japan (BoJ) continuing with its monetary easing measures. Increasing the labor market participation would also be a step in the right direction as more people working would translate into higher national earnings and higher spending.

Another major worrying factor is the strengthening of the yen, especially due to global factors. The revival of the euro zone crisis has prompted a renewed flight to safe investment opportunities. The yen has appreciated sharply against the euro to its highest level since 2000, and strengthened against the dollar back into the 78-79 range. Earlier this month, the Japanese Finance Minister Jun Azumi warned markets that he was ready to intervene as it was necessary to prevent the yen from appreciating further since it did not reflect the real state of Japan's economy.


A weaker yen would help the Japanese exporters, but the Ministry of Finance is unlikely to succeed in delivering it while investors seek to escape the euro zone crisis. With the expectation that the euro zone crisis could escalate further, this is likely to push the yen up sharply and unilateral intervention is unlikely to be that much of an offset on its own.

Meanwhile, the BoJ could ease monetary policy further and, indeed from its statements this month, it would do so if the strong yen threatens the economy, possibly a coded warning of further asset purchases.




http://www.ibtimes.com/articles/367805/20120728/japan-economy-deflation.htm

TEPCO to raise household electricity rates 8.46% from Sept.

http://mainichi.jp/english/english/newsselect/news/20120725p2g00m0dm069000c.html

Expected workforce in 2030 to fall by 13.4% by 8.45 mil.

The number of employed people may drop by as much as 8.45 million by 2030 from the 2010 figure of 62.98 million, according to a labor ministry panel of experts studying the country's employment policy.

In its report unveiled Monday, the panel emphasized the need for the government to help women and young people find and secure jobs because the decline in employees is likely to hinder the nation's economic growth.

The estimate of a maximum contraction of 8.45 million was made on the basis of assumptions that economic growth will remain at zero percent and the number of working women and elderly will remain unchanged through 2030.

On the other hand, if the economy keeps growing at about 2 percent in real terms, while the proportion of working women and elderly people rises from 2010 levels, the decline in employed individuals over the 20-year period is projected to be 2.13 million.

The Health, Labor and Welfare Ministry's panel said it is important to help women raising children to find work, while at the same time extending support to help secure jobs for the elderly.

To create jobs, the panel said it is necessary to support domestic manufacturing businesses, a sector that is being hollowed out at an accelerating rate as operational footholds are shifted abroad to cut costs and remain internationally competitive.

The panel unveiled in 2007 the estimates on the working population by combining the numbers of employed and unemployed.

In the 2007 estimates, the panel said the number of employed people would decline by as much as about 10.7 million in 2030 from the 2006 figure of 66.57 million.

http://www.yomiuri.co.jp/dy/business/T120723003610.htm

AirAsia Japan to launch discount campaign

Low-cost airline AirAsia Japan said Thursday it will start a special discount campaign ahead of its service launch in August.

The firm will offer 1,980 yen one-way fares between Narita International Airport and New Chitose Airport in Hokkaido, down from the minimum regular fare of 4,580 yen.

Special fares are also available at 1,980 yen for one-way flights between Narita and Fukuoka Airport and at 2,980 yen between Narita and Naha Airport in Okinawa Prefecture.

From Friday to Monday, AirAsia will accept reservations on its website for flights from Aug. 28 to Oct. 27.

AirAsia, a subsidiary of All Nippon Airways, aims to sell 2,000 tickets on each of the three routes.


http://www.yomiuri.co.jp/dy/business/T120719004511.htm

Auto-linked firms launch 'super discount' rentals

A growing number of gasoline stations, used-car dealerships and auto repair shops have begun offering "super discount" car rentals to offset falling sales as car ownership declines.
Auto-related businesses can offer cheap rentals by making use of existing staff, repair facilities and, for used-car dealers, vehicle inventories to maintain a fleet of vehicles.

Discount rental operations are meeting strong demand from those who choose not to or can't afford to own a car amid declining incomes and rising fuel, insurance and maintenance costs, in addition to the threat of higher taxes.

A gas station in the western Tokyo suburb of Kunitachi is one business involved in the trend.

"We managed to avert closure thanks to the rentals," said station head Toshiaki Akuzawa, 46.

Revenue from rentals has grown over the three years since it began and now accounts for about a third of overall sales, Akuzawa said.

The rental business has allowed the service station to increase revenues in all sorts of ways.

"Selling used cars to customers in the rental business, repairing the cars and helping with vehicle inspections have become the pillar of our revenues," Akuzawa said.

For Carbell Co., a Tokyo-based car dealer, running a discount rental chain has become a way to actually sell more cars. Carbell runs about 170 franchises nationwide, mainly at used-car dealerships.

"Discount rental is a tool to attract customers. It may earn little, but we expect it to result in an eventual increase in car sales, which is our core business," a company official said.

Carbell rents compacts with engines up to 1,500cc for ¥100 per 10 minutes for up to three hours — and customers get even lower rates if they rent for longer periods. A one-day rental would cost ¥4,200, about half the rate offered by major car rental firms.

One customer, Kumi Negishi, 40, said the service is a boon.

"It's economical as I can rent for whatever hours I need and whenever," she said.

Negishi, president of Kikunoya, a traditional restaurant in Tokyo's Nihonbashi district, used to own a car to fetch supplies, deliver food and do family chores. But keeping the car at a nearby parking lot cost her nearly ¥40,000 a month.

Three years ago she gave up her car when a Carbell franchise opened across the street from her restaurant.

"I need a car only for about an hour at a time. If I take a taxi, it would cost me several thousand yen, but Carbell costs me less than ¥1,000," Negishi said.

Rentas Co., based in Yokohoma, is another discount car renter, offering automobiles with engines smaller than 1,350cc for about ¥2,100 for up to six hours. An all-day rental is ¥3,360, the industry's lowest rate, according to the company.

Rentas operates more than 900 outlets, mainly at gasoline stations and repair shops, and expects the figure to reach 1,000 by the end of this year.

A Rentas official said that opening a franchise at these shops doesn't involve any initial investment, enabling the company to provide attractive pricing.


http://www.japantimes.co.jp/text/nb20120724a6.html

Average income of households in 2010 down to 1988 level

The average annual income of Japanese households in 2010 declined ¥132,000 from a year earlier to ¥5,380,000, the same level as in 1988, the Ministry of Health, Labor and Welfare said in a report Thursday.

The figure represents a drop of ¥1,262,000 from the record ¥6,642,000 marked in 1994.

The ministry attributed the decline to deterioration in the employment situation and the increase in the number of nonregular workers. The report also said an all-time high of 61.5 percent of households replied that they were struggling to make a living.

A total of 7,156 households responded to the survey performed on July 14 last year. Iwate, Miyagi and Fukushima prefectures were not surveyed due to the earthquake and tsunami disasters that hit the region last year.

The survey showed that the average income of households with one or more children decreased by ¥385,000 to ¥6,581,000 in the reporting year, indicating the economic slump has severely affected child-bearing households.

The average income of households of people aged 65 or older declined by ¥20,000 to ¥3,072,000, according to the report.

By income bracket, 13.6 percent of households came in between ¥3 million and ¥4 million, forming the biggest group, followed by 13.3 percent whose average income was between ¥2 million and ¥3 million, and 13.1 percent with average incomes of between ¥1 million and ¥2 million.

http://www.japantimes.co.jp/text/nn20120706a4.html

Foreign ownership of Japanese debt at 8.3%

  Foreign ownership of Japanese government bonds has risen to its highest level in more than 30 years, signaling increasing dependence on investors abroad to finance the world's largest public debt.

Overseas investors owned 8.3 percent of JGBs as of the end of the fiscal year in March, the Bank of Japan said in a report Tuesday. This was the most since the end of fiscal 1979, the earliest for which comparable data are available.

(Japan Times, Jun 20)

Link: http://www.japantimes.co.jp/text/nb20120620n2.html

Number of people on welfare tops 2.1 mil.

The number of people receiving welfare benefits topped 2.1 million for the first time as of the end of March, the Health, Labor and Welfare Ministry announced Wednesday.

The preliminary report figure was up 10,695 from February to 2,108,096, rising for the ninth straight month since July last year, when a 60-year record high was posted.

The number of households receiving livelihood protection benefits under the Public Assistance Law also reached a record of 1,528,381, up 6,897 from the previous month.

While 40 percent of welfare recipient households were elderly, "other households," which includes unemployed people seeking work, accounted for 17 percent, or 260,945 cases. Recipient households are classified into six categories, including single-mother households and single-father households.

Welfare benefits are expected to top 3.7 trillion yen in the current fiscal year, up about 1 trillion yen over the past five years.

As the numbers continue to rise, there has been concern about recipients receiving benefits despite having family members or relatives in a position to support them.

To address this problem, the ministry is considering reforms to the public assistance system, including such measures as confirming whether an applicant's family members can financially help the applicant, and helping recipients who are able to work find jobs, according to the ministry.

http://www.yomiuri.co.jp/dy/national/T120613004251.htm

4Q 2011 - GDP Growth 4.7% annualised

The Cabinet Office announced Friday the growth rate of the country's gross domestic product on a real basis in the fourth quarter of fiscal 2011 was revised upward to 1.2 percent, or 4.7 percent on an annualized basis, from the previous quarter.

In an interim report in May, the seasonally adjusted figure, excluding price fluctuations, notched an increase of 1 percent, or 4.1 percent on an annualized basis, from the third quarter of fiscal 2011.

The upward revision was mainly because the rate of decline in capital investment was revised from minus 3.9 percent to minus 2.1 percent based on results of the Finance Ministry's Financial Statements Statistics of Corporations by Industry in the fourth quarter.

The revised data showed the nation's economic growth in the quarter was up partly on demand for reconstruction from the Great East Japan Earthquake.

The rate of increase in consumer spending, which accounts for about 60 percent of GDP, was also revised upward to 1.2 percent from 1.1 percent in the interim report.

The rate of increase in exports was revised upward to 3 percent from 2.9 percent in the interim report.

Reflecting price fluctuations, the growth of nominal GDP, which more closely reflects consumer sentiment, was revised upward to 1.2 percent, or an annualized 4.9 percent, from 1 percent, or an annualized 4.1 percent, in the interim report.

The real GDP in fiscal 2011 fell 0.004 percent from the previous fiscal year. Though the rate of increase was revised upward from minus 0.01 percent in the interim report, positive growth was not achieved.

The nominal GDP also shrank 2 percent, revised down from 1.9 percent in the interim report.


http://www.yomiuri.co.jp/dy/business/T120608004031.htm

Average Family Savings over Y16m

The average Japanese family has ¥16.64 million in savings, more than twice the average annual salary in the nation of 128 million.

2011 saw a 0.4 percent increase from a year earlier, with households of two or more people holding average debt of ¥4.62 million.

Japanese have long enjoyed a reputation as disciplined savers, as rates generally declined in the West in recent decades, including the United States, where economists and politicians have bemoaned low savings rates.

However, the data recently released by the internal affairs ministry also point to a widening savings rate gap, as the nation looks to kick-start its moribund economy and deal with a rapidly aging population, which has put increasing stress on public coffers.

Two-thirds of households saved less than the average ¥16.64 million, the data said, with median savings standing at ¥9.91 million.

Some 10.2 percent of the top-saving families had more than ¥40 million each, while the bottom 11.2 percent had a cushion of less than ¥1 million, the ministry said.

http://www.japantimes.co.jp/text/nn20120522f3.html

Japan Could be back to 1% inflation in 2 years

The Bank of Japan could reach its 1 percent inflation goal in two years as brighter growth prospects spur prices, the central bank’s top economist indicated.

“Growth in prices will be closer to the 1 percent inflation goal at or after the end of fiscal 2013 unless the economy gets thrown off course,” Eiji Maeda, 50, the BOJ’s chief economist, said in an interview in Tokyo yesterday, referring to the year ending March 2014. “In the long term, there are signs that the tide is turning in price trends.”

The remarks signaling that the target could be met in the year starting April 2014 are the strongest yet from the central bank, which last month forecast prices would increase 0.7 percent in fiscal 2013. BOJ Governor Masaaki Shirakawa has pledged “powerful” monetary easing until the goal is in sight and has already added stimulus twice this year.

Companies have improved Japan’s growth outlook by targeting an aging population, which could spur demand and help lift prices, Maeda said. Higher labor costs in countries like China, Japan’s largest trading partner, have reduced pressure on Japanese firms to lower prices, which has also helped ease deflation in Japan, he said.
Gap Erased

The gap between supply and demand as a ratio to gross domestic product, which currently stands between 2 percent and 3 percent, will probably be erased over the next two years, he said. Consumer prices tend to rise 0.3 percentage point for every 1 percentage point improvement in the gap, Maeda estimates.

“It’s a very bullish estimate,” Yoshiki Shinke, chief economist at the Dai-Ichi Life Research Institute in Tokyo, said of BOJ’s 0.7 percent price outlook for the next fiscal year. “Chances are high that the BOJ will be forced to conduct additional easing as actual price growth will be lower than its forecasts.”

The BOJ unveiled the 1 percent target in February. Core consumer prices, which exclude fresh food and are the central bank’s preferred measure, rose 0.2 percent in March. Prices will rise 0.13 percent in fiscal 2013, according to 40 economists surveyed by the government affiliated Japan Center of Economic Research last month. Shirakawa’s five-year term ends in April.

The central bank has come under pressure this year to bolster its asset-purchase fund, the main policy tool with its key rate near zero, to sustain the nation’s recovery from last year’s record earthquake and weaken a currency that surged to a postwar high in October.


http://www.bloomberg.com/news/2012-05-15/tide-turning-in-japan-deflation-fight-boj-s-top-economist-says.html

Deflation hasnt crushed Japan

  A NYT article that reported on the declining importance of manufacturing to Japan's economy at one point referred to: "the crushing deflation that has burdened Japan's domestic economy for nearly two decades." Actually, Japan has experienced modest inflation rather than deflation for most of the last two decades. Even when prices did fall, the rate of decline has been slow, exceeding 1.0 percent only in 2009, in the wake of the world financial crisis.

Japan, like other countries, suffers from having an inflation rate that is too low. This is a problem because nominal interest rates cannot fall below zero. It would be desirable to have a large negative real interest rate at present (the real interest rate is the interest rate minus the inflation rate), but this is not possible when inflation is a low positive number or a negative number.

  The fact that the inflation rate is below zero has no special importance in this story. The decline in the inflation rate from a positive 0.5 percent to a negative 0.5 percent is now worse than a decline in the inflation rate from a positive 1.5 percent to a negative 1.5 percent.

This fact can be seen clearly if we remember that the rate of inflation is an aggregate of tens of thousands of price changes across the economy. When the inflation rate is near zero many of these price changes will be negative, meaning that the prices of some goods are falling. (Computer prices have been falling rapidly in the United States for decades.) When the rate of inflation goes from a small positive number to a small negative number it simply means that the percentage of items with falling prices has risen. It is difficult to see how that could amount to some sort of calamity.

This point is important because the obsession with deflation has been a serious distraction in policy debates. Many have implied that the Fed and other central banks have been successful in their anti-recession policy because they have managed to avoid deflation. This is not true. They have in fact failed because they have not been able to lower the real interest rate as much as would be desirable given the weakness of the economy.

http://www.businessinsider.com/japan-has-not-suffered-from-crushing-deflation-2012-4

2011- 4th Year of Land Price Falls

For the fourth consecutive year, Japan's land prices have fallen. Prices decreased an average 2.6 percent in 2011, but the decline was smaller than the 3.0 percent in 2010 as the economy bounced back from the 3/11 disasters. Commercial land prices slipped 3.1 percent in 2011, less than the 3.8 percent drop in 2010, and residential land prices fell 2.3 percent, less than the 2.7 percent decline in 2010.

Fortunately, the triple disasters did not cause an overall steep drop in land prices nationwide. But attention must be paid to the fact that the disasters caused sharp declines in land prices in certain locations. Residential areas in Fukushima Prefecture, which was most affected by the nuclear crisis, saw land prices fall 6.2 percent in 2011 compared with 3.4 percent in 2010. There was a net population outflow of some 31,000 in 2011 — more than five times the corresponding figure in 2010.

While residential land prices in the Tokyo megalopolis declined 1.6 percent, those in the Osaka and Nagoya megalopolises fell 1.3 percent and 0.4 percent, respectively. In the Nagoya area and cities lying to the west of it, many areas saw rises in land price thanks to an influx of people from the Tohoku region. Iwate, Miyagi and Fukushima prefectures together saw a net population exodus of more than 40,000.

The Nagoya area saw land prices go up in 147 locations in 2011, double the 2010 figure and the Osaka area saw land prices rise at 165 locations, up from the 8 in 2010. In the Tokyo area, land prices rose at 91 locations, an increase of 13. Efforts are called for to prevent land speculation in areas that have experienced an influx of residents from Tohoku.

In municipalities devastated by the 3/11 disasters, there was polarization of land price movements. While land prices shot up at highland areas, land prices fell in areas destroyed by the tsunami or affected by liquefaction. Land prices soared by 60.7 percent in one highland area in Ishinomaki, Miyagi Prefecture. Many areas that had been submerged by the tsunami saw their land prices decline by more than 10 percent. In Urayasu, Chiba Prefecture, average land prices fell 7.5 percent due to liquefaction.

To stabilize land prices in disaster-hit areas, serious efforts must be made to utilize land in ways that will enhance its value, make affected areas more resistant to earthquakes and tsunamis, and establish better emergency evacuation routes and warning systems.

http://www.japantimes.co.jp/text/ed20120411a1.html

Winter bonuses down for 3rd straight year

 Winter bonuses paid between November 2011 and January 2012 fell for the third straight year, reflecting corporate earnings deterioration in the wake of the March 2011 disaster and a global economic slowdown due to the eurozone debt crisis, government data showed Tuesday.
The bonuses averaged 372,471 yen, down 1.9 percent from a year earlier, the Health, Labor and Welfare Ministry said. The data cover companies that have five employees or more.
In February, total monthly salaries per worker, which includes overtime pay and bonuses, rose 0.7 percent from the previous year to 265,497 yen on average, marking the first rise in nine months thanks to a leap day.

http://www.yomiuri.co.jp/dy/business/T120403004060.htm

'King of Tokyo' dethroned by insider trading probe

Edward Brogan was Japan’s highest-profile hedge fund manager until he suddenly dropped out of view this month.
Dubbed the “King of Tokyo” by traders, the 53-year-old American seemed to have it all: wealth, professional acclaim and status as a patron of contemporary art.
In his best year, Brogan had managed over one billion dollars in his flagship Whitney Japan Fund, although much of that has been withdrawn.
Now Brogan is at the center of a probe of insider trading. His Tokyo-based firm Japan Advisory has been closed since regulators imposed a fine and revoked its license at the end of June.
The order came after Japan’s securities watchdog determined Japan Advisory had shorted shares in Nippon Sheet Glass in August 2010 on the basis of leaked information that the glassmaker was planning an additional share offering that would have diluted its value per share.
It was one of five insider trading cases unearthed so far by authorities after a grinding two-year investigation into allegations of widespread insider trading ahead of public share offerings in Japan.
Brogan, who is said to be overseas, has not been charged with any wrongdoing, and none of the current raft of insider trading investigations in Japan has included any legal sanctions against individuals.
“He’s not in Japan, and I haven’t heard when he’s coming back,” Brogan’s Japanese-born wife, Junko, told Reuters. “I think he’s being made a scapegoat by the Japanese government.”
Japan’s Financial Services Agency (FSA) stepped up the pressure on Japan Advisory earlier this month by ordering a dozen investment banks to report on whether they had leaked inside information about planned share issues to the hedge fund manager in return for winning trading orders.
The July 3 directive was the first time Japan’s securities watchdog had singled out an investment firm like Japan Advisory for that kind of scrutiny.
Three days after the July 3 order, Brogan left Japan, two people with knowledge of his departure said.
A sign outside the Japan Advisory office says: “Temporary Closed.”  There was no immediate word on the fate of its affiliated funds.
By the end of June, assets in the flagship fund had dropped to $228 million, falling over time to about a sixth of the value in 2005, according to industry data.
But Whitney Japan has outperformed the market by a wide margin since 2000.
Brogan did not return calls or respond to a message sent by email. Temporary staff at Japan Advisory declined to comment.
How the Japan Advisory case plays out will be closely watched since Japan’s $17 billion hedge fund industry has operated in a kind of grey area of oversight for years.
The position of hedge funds has been a focus of the FSA since at least 2007 when then-financial services minister Yoshimi Watanabe said some of them were “piranhas” that needed to be expelled.
Tsutomu Okubo, the lead director of a ruling Democratic Party of Japan committee looking into insider trading told Reuters he was gathering trading data with the aim of publishing a watch list of suspicious hedge funds that should be investigated by regulators.
When it launched in 2000, Japan Advisory had been a subsidiary of the U.S private equity and hedge fund operator the Whitney Group.
But Brogan’s former partner, J.H. Whitney Investment Management, said it severed ties with Japan Advisory in December 2011 and transferred controlling interests in two affiliates to Brogan and others. It said in a statement the move was unrelated to the insider current investigation.
In interviews with Reuters, more than a dozen of Brogan’s associates described him as a driven investor who pushed hard to uncover profitable trading ideas and paid brokerages bonuses that could vary on the level of service he received.
In more than a decade of trading, Japan Advisory spun off tens of millions of dollars in commissions for brokerages including Goldman Sachs, JP Morgan, Citigroup and Nomura Holdings, associates says. Representatives of all of those financial institutions declined to comment.
Brogan and the firm gave “bonus” or “tactical points” to brokers that could mean additional commissions, three people with knowledge of the practice said. Like others interviewed they spoke on condition of anonymity because of the ongoing investigation.
The use of a points system by institutional investors to compensate brokers is not unusual in Japan, but Brogan’s model was heavily discretionary, creating a possible incentive for inside information to be leaked, officials have said.
In the Nippon Sheet Glass case, investigators found Japan Advisory had short-sold about $6.8 million in shares on Aug 20, 2010, four days before the company announced a share offering to raise capital that diluted the holdings of existing investors. A sell-off over those four days cut the glassmaker’s market value by 8%.
Regulators believe a former employee of Daiwa Securities Group was the source of that tip. Daiwa, which underwrote the offering, has apologized and launched its own investigation. The identity of the former employee has not been made public. One reason that regulators centered on the Daiwa connection was Brogan’s allocation of points to the brokerage, one person with knowledge of the matter said.
Japan Advisory was the second firm punished for insider trading in the Nippon Sheet Glass offering. In the other case, Japanese hedge fund Asuka Asset Management was fined and regulators believe JP Morgan, the other lead underwriter on the offering, was the source of that leak.
MAN ABOUT TOWN
Daiwa was not alone in courting Brogan. Brokers would host him at expensive nights out on the town, that would often start at upscale Italian restaurants and end at a strip club in the Kabukicho neighborhood of Shinjuku, four people who competed for Brogan’s attention and business said. The tab could run into the thousands of dollars, and it was understood Brogan’s hosts would pay.
“He wielded so much power and everyone kind of bowed down to him,” said one broker who worked with Brogan. “He was the ‘King of Tokyo.’ That’s what we called him.”’
For Brogan, the current investigation is the most serious setback in a three-decade career. He first came to Japan in the boom of the 1980s and by 1991, he was research director at Marusan Securities, a second-tier Japanese broker. He then made the leap to a series of Western banks, including a stint as auto analyst at Salomon Smith Barney. He was briefly at Tiger Management in Japan, an offshoot of the famous fund established by Julian Robertson.
In 2000, Brogan was hired by Whitney to help set up Japan Advisory.
By 2005—the fund’s best year—the Whitney Japan Fund was worth $1.3 billion. One million dollars invested in 2000 would have been worth $2.5 million by that year, according to industry data.
THE COLLECTOR
When he was riding high, Brogan cultivated an interest in modern Japanese art.
“I approached him to create an art fund because he was the biggest and most important on the street,” said Joni Waka, a Japanese curator who has anglicised his name to Johnnie Walker.
That idea fell through but Walker became a friend and a confidante of Brogan. He also helped build a large art collection for Brogan that remains in the offices of Japan Advisory. Works on display in the hallway alone could sell for over $100,000, experts said.
Brogan’s interest in art took him into a world far removed from funds and stock picks. Three months after Japan’s earthquake and nuclear crisis last year, Brogan was the only person with a finance background at a masquerade party with art writers, journalists and a self-described Japanese shaman.
In a video of the party, a shirtless waiter stood at attention, while each guest was asked to say how they would tackle Japan’s crisis. Brogan, wearing a Hawaiian shirt and a gold mask, singled out energy policy and said: “If I were prime minister, I would be focused on making Japan a green leader.”
Brogan continued to meet friends and brokers until weeks ago at a small bar just minutes from his home in the Hiroo district of Tokyo. He stored his favored Rebel Yell Kentucky bourbon there. An empty bottle sits on the shelf as a kind of tribute kept by the staff.
Walker, his confidante, said Brogan would be back. “Ed Brogan is taking a step back. He’s keeping his cool,” he said.


http://www.japantoday.com/category/crime/view/king-of-tokyo-dethroned-by-insider-trading-probe