Industry

Japan Causes Toshiba Tension

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Japan’s crisis has led to a downturn in Toshiba investment.  According to one of the corporation’s American partners (NRG Energy), there will be no additional investment in a Texas nuclear power project, due to the “Japanese nuclear plant” crisis.  There was the intention of developing a further two reactors near Houston but now David Crane, the company’s president has said that the recent crisis created “multiple uncertainties around new nuclear development in the United States which have had the effect of dramatically reducing the probability [of constructing reactors in the South Texas Project] in a timely fashion.”

US Impacted by Japan’s Crisis

This announcement came in reaction to the Japanese crisis.  NRG – as a result of what happened in the Asian region – “will not [be] invest[ing] additional capital in the STP development effort.”  It has been said that this indicates that the Japanese crisis “has directly affected the US nuclear power industry.”  It remains unclear as to whether Toshiba will move forward with its project with other partners.

New Toshiba Projects

But despite its reservations vis-à-vis the Japanese crisis, Toshiba is still forging ahead with other new and exciting projects.  It is due to “launch its first tablet computer” in a couple of months and, according to company’s digital products and services unit president Masaaki Oosumi, “attempt to gain a 10 percent share of the global tablet market by 2013.”  It is an impressive PC tablet, based on Android’s 3.0 operating system, priced at approximately ¥60,000 (US$730) in Japan.

 

Malaysia Strong Asian Investment Opportunity

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Malaysia: Major Asia Asset

Just two days ago a $3.7bn investment announcement came from Malaysia, set to “to jumpstart foreign interest in its economy even as other Asian countries try to stem speculative inflows in search of higher-yielding markets.” The country’s Prime Minister (Najib Razak) intends to try and get $444bn worth of investments resulting in Malaysia becoming a “developed country by 2020,” including $165m by Asia Media to create digital media infrastructure as well as the establishment of a state-owned energy development agency to be able to attract $106m worth of investments this year. This is all part of the country’s “Economic Transformation Programme,” a project that is due to be put into practice over the next decade.

Other Asian Countries Less Successful

Malaysia has been doing pretty well recently vis-à-vis investments. Indeed it has already attracted around $5bn in pledges from Exxon Mobil and Royal Dutch Shell Pic as well as other (smaller) projects. For example Indonesia, the Philippines and Thailand are having quite a few issues attracting investments anything near to the success of neighboring Malaysia.

But this hasn’t deterred Najib who is determined to ensure Malaysia stays one step ahead, “transforming [it] into a high-income economy within 10 years by generating new growth areas and restructuring the economy to lure investors.” Yet this goal is not as easy as it may seem. Investment blueprints from the past aren’t showing such great results. As well, in general the economy has been suffering from a less-than-skilled workforce to enable it to develop into the “financial services hub” it wants to. Yet it is past the stage of being a low-end manufacturing center,” as countries such as Vietnam now have that role.

Notorious Najib

Still, given all these efforts made by the country’s premier, the public is remaining loyal to Najib. Although one has only to look at the facts on the ground to see where the country really is, given that the exchange was down more than 5 percent from where it was just four years ago. While there is now more opportunity for competition, in general, investors are expecting the government to “take more aggressive steps to reduce its fiscal deficit and overhaul an affirmative action policy they say hinders competition.”

Malaysia PJ: Malaysia Post Japan’s Trauma

It might not have been a surprise if any parts of Asia – including Malaysia – would have been negatively impacted by Japan’s trauma. But in fact this hasn’t been the case, according to Datuk Donald Lim Siang Chai, the country’s Deputy Finance Minister. He claimed that it will “have little impact on the Malaysian economy in 2011.” Vis-à-vis the country’s exports to Japan he said that actually some areas (like plywood and liquid natural gas) would actually probably “increase during the second quarter of this year as Japan increases its reconstruction work of earthquake-damaged areas.”

As well, Malaysia probably won’t be affected by Mid-East and North African troubles either since trade between those countries is anyway only at around 2 percent.

So all in all things are looking good right now for Malaysia. The country has developed a strong enough economy and excellent relations with regions with which to continue exporting to see it through any troubled times Asia may be encountering.

Global Financial System Reform?

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BRIC Leaders Meeting

BRIC nation leaders (Brazil, Russia, India and China) are meeting up in China for a one day conference. BRIC is actually a bit of an inaccurate description now (it should really be changed to BRICS) since South Africa recently joined. As a unit they have both economic and political influence today, and also form part of the G20. The topic to be addressed will be reforming the global financial system since the nations comprising the BRIC make up 40 percent of the world’s population and nearly a fifth of its growth. Given these statistics, the BRICS feels they deserve a “greater say in global affairs.” While BRICS influence has increased since the start of the global financial crisis, there is still much more to be done.

BRICS Status

The BRICS will be discussing rules regarding international trade but there is no guarantee that it will hold much weight. BRICS are in favor of free trade and against protectionism, but in general don’t agree on much. Since all BRIC countries fared well vis-à-vis the 2008 economic crisis, they have already proven themselves. India has a global economic status vis-à-vis being a service provider and engages in the most trade with China although has a large trade deficit with the Chinese.

China Success

China is doing very well in the hi-tech industry, now having the status as a “mass producer of hi-tech products,” such as semi-conductors and solar panels. As well it is doing well in garment and textile industries, maintaining its reputation for being top in low-cost high value markets. At the end of the day China needs to continue to “maintain competitiveness in the global economy [through] low-cost manufacturing.” But if prices start to go up, then what will start happening is that companies will start looking elsewhere like Vietnam.

Indeed, just this last year China started constructing high-speed rail around the world, and is now “home to the world’s fastest train,” and it looks like Brazil is going to use Chinese firms to plan their high-speed rail project. But perhaps some of China’s success will come at the expense of other countries. Brazil and India are “concerned” China will “flood their markets with cheap goods.”

BRIC Cohesion?

Even though the four (now five) countries form the BRIC, it seems that in general, experts feel that the acronym alone is insufficient to give them a unified presence “on the global stage.” It is going to take much more time and a “wait-and-see” approach will have to be taken vis-à-vis G20 and other countries collaboration. While the BRIC are lessening their need to work with developed economies, globally they still have to collaborate with the “major industrialized nations.”

So the BRIC (or BRICS) do definitely have much to offer, but they need to work on compromising so that they can become a more cohesive unit and thus a force to be reckoned with vis-à-vis reforming the global financial system.

Japanese Properties to Quake?

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It was bad enough that the whole of Japan was totally shaken up in more ways than one because of the tsunami disaster, but now it seems like the same is going to happen to what remains of its real estate market. Perhaps not surprisingly, companies are now reported as being “cautious” vis-à-vis the country’s property market although they are trying not to enter into drama-panic mode. As Prudential Real Estate Investors Chief Executive J. Allen Smith put it, “we are taking a wait-and-see approach,” given that so little time has lapsed since the disaster, thus rendering it too early to look at the economy and the markets in a stable light.

Real Estate Troubles Pre-Quake

However, what many are failing to realize, is that even before the terrible disasters struck Japan, the country was reeling from real estate woes. Indeed, over the last two-and a-half years, figures showed a drop in the country’s commercial real estate markets by nearly 20 percent (to the end of the third quarter of 2010). Even at the time this was somewhat of a shock, with Japan ranking as the second biggest “commercial property market by value,” being “one of the few major real estate markets to continue to record capital depreciation.” This clearly reflects its stagnant economic growth.

No Long-Term Lull

So the question being asked then – given all this background information – is what chance does the country now stand of beefing up its real estate market? Well, things don’t have to be all that gloomy, at least not for the long-term. While it is the case that companies like Prudential Real Estate Investors are standing back somewhat from jumping on Japanese properties, they hope this will change in the not-so-distant future. Indeed, the country was described by the company as “an important real estate market,” so with that kind of language, it is unlikely to show itself as a fair-weathered friend.

As well, one of Prudential’s new funds has “earmarked about 50% of capital for Japan,” although it is still “taking a step back” vis-à-vis the country and its real estate. Still, there is funding going on in certain specific parts and markets of Japan, like Tokyo’s retail property assets. Thankfully, according to Smith, “the assets weren’t damaged in the massive quakes.”

Prudential Investing

Despite all of this, it does seem that Prudential remains serious about Japan and its real estate market. Even when things were looking particularly gruesome, the company’s financial chair and CEO John Strangfeld committed the Prudential Foundation to putting $6.1 million to “support disaster relief in Japan,” at the end of last month. Moreover, at around the same time, Prudential Real Estate Investors “co-invested with clients on two Pan-Asia funds totaling about $1.5 billion that have ‘meaningful allocations to Japan.’”

So while things definitely could be better for Japan, its economy and its real estate market, given the earthquake and tsunami disaster, as well as the problems it was experiencing prior to all of this in its markets, it seems clear that there is still confidence in the world’s second largest commercial property market, third largest economy and global financial player.

Spotlight on Conduit

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The mobile online and mobile app industry is one of the fastest growing markets in the world today. With Apple’s App Store, Google’s Android Market, and RIM’s Blackberry App World, the industry is in constant competition, making it difficult for other parties to make a name for themselves.

One company that has managed to do so is Conduit. This web and mobile app publisher currently has more than 230 million users, 200 employees and 260,000 web publishers. The original Conduit Network enables global and independent app publishers to develop, distribute and exchange apps across the globe. The network also makes it easy to create business partnerships.

Conduit provides an easy, effortless method of distributing apps anywhere in the world, from toolbars to mobile devices to web browsers. Apps can be deployed directly, or through the Conduit App Marketplace.

Founder and CEO of Conduit Ronen Shilo said: “We know how competitive it is these days to market products, services and content online, which is why we provide an open solution that levels the playing field and creates new business opportunities. With our vast network and App Marketplace, we are enabling Web and mobile publishers of all sizes to freely and easily create and share content with one another, as well as acquire and engage users more effectively. We believe that it’s this same open spirit which attracted people to the internet 15 years ago, that continues to draw publishers to Conduit over and over again.”

Some of the better known Conduit users include MLB (Major League Baseball), Time Warner Cable, Univision, Chelsea Football Club, Fox News, iVillage, Groupon, Travelocity and TechCrunch.

Kuwaiti Investments

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Kuwait Working with Morocco

North Africa Holding Company (NorAH), a Kuwaiti investment firm has just “acquired a minority stake in a Morocco real estate developer,” with its investment and place on the board in Dar Saada Company (DSC). It looks like there will be significant opportunities for NorAh in the North African housing market that is currently on an up.

NorAH’s Investment Goals

Given NorAH’s strong, solid, stable base, it is the perfect company to make an investment. It works well with various economies in the North African region, having the capacity (with its KD 50 million capital base) to “contribute to the sustainable development” there. It is also “one of the largest pan-regional investment companies.” When it joins up with other companies, it can help them become “premier regional and global players.” Since it recognized that the housing market had huge potential, it made sense for it to move in that direction. Since there hasn’t been such a commitment by the government to respond to the lack of Moroccan affordable housing, the company’s CEO, Emad Anwar Al-Saleh said the sector is likely to undergo “major growth in the next few years.”

NorAH Gets Assistance

NorAH has been receiving significant assistance in raising the necessary $137m for the stake. Companies providing capital include: Wafa Assurances; Aabar Investments (Abu Dhabi), RMA Wataniya and Idraj Capital Development Fund. In addition, NorAH plans to “target investment opportunities arising in North African economies.”

Armenian Investment is Working

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Increased Investment Opportunities for Armenia

Good news for Armenian investments. According to the country’s parliament chairman, Hovik Abrahamian, attempts are being made to push for investments in the transport and energy sectors throughout the BSEC countries.* As well, the greater cohesion between BSEC member countries, the better for all, especially since this is the current goal of the National Assembly of Armenia. This is bound to lead to an increase in investment opportunities for the country.

Armenia Develops Iranian Energy Cooperation

When Armenia attempts to work with Iran, according to Armen Movisyan (the former country’s Energy Minister), around 80 percent of cooperation between the two countries comes from the energy sector, at an estimated volume of $450 million. If a third transmission is built and a hydroelectric power plant on Araks River, this will further connect the two countries which could also ultimately lead to the goal of establishing a “North – South” transport corridor.

Armenia and Energy Security

According to Sevak Sarukhanyan (Armenia’s Deputy Director of Noravank Foundation), “energy security is the most important issue for Armenia, as the country was probably the first state in CIS and the post-Soviet area to be hit by a severe energy crisis.” The two factors that basically led to this crisis were the closing of the Metasmor nuclear power plant in the late 1980s and the shifting of the country’s energy production to thermal power plants utilizing natural gas and fuel oil.

So it does seem today that there is much work to be done in terms of political and economic cohesion between Armenia and other BSEC countries, as well as Iran. At the end of the day – political affiliations and aspirations aside – most countries want the best for their citizens and that usually means working with neighboring countries to acquiesce the best investments.

*Established in 1992, the BSEC comprises Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and Ukraine with Austria, Germany, Egypt, Israel, Italy, Poland, Slovakia, Tunisia, France, the Confederation of European Energy Charter and the International Black Sea having observer status.

South Korea ADIA Merger

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In an attempt to escalate investments for the two, the Abu Dhabi Investment Authority (ADIA) is joining up with South Korea, seeking to develop the region’s state-run funds in a global capacity. The latter is known as being “one of the world’s largest sovereign wealth funds.” The National Pension Service (NPS) and Korea Investment Corp (KIC) are set to reap most benefits from this alliance which will enable ADIA to make investments through a South Korean local brokerage.

NPS Credibility

The NPS has some serious credibility. It is the world’s fourth leader in pension funds, standing at over 300 trillion won. But one can always take things further. It is today trying to escalate its overseas investments in the field of resources development.

KIC Financing

Where does the Korea Investment Corporation fit into all this? This organization has only been around for just over five years with the aim of “enhancing sovereign wealth and contribut[ing] to the development of the financial industry by efficiently managing assets entrusted by the Government and the Bank of Korea.” As well, it seeks to keep hold of its long-term purchasing power on its assets and “exceed investment target return” through the investment of “well-diversified, foreign currency denominated assets transacted in the international capital markets.”

ADIA’s Portfolio

ADIA is pretty impressive too. Owned by the Abu Dhabi government, the authority has been in business for over 35 years and is today recognized as a “globally diversified investment institution.” It spans over two-dozen areas, including: fixed income, private equity, infrastructure and equities.

So all in all this merger looks like it’s going to be mutually beneficial to the region and the authority. As soon as there is such a cohesion, it has a much greater possibility of being able to have a much larger and longer-term impact on the global economy.

Price of Tsunami in Japan With a Potentially Crumbling California

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<h3>Tsunami is Costly Vis-à-vis Dollars and Death</h3>
As Japan still faces a disaster that seems to keep continuing, the financial impact is slowly being assessed.  It is thought that the country will be facing tens of millions of dollars worth of damage as well as continuing fatalities, the latest being when 25 year old Dustin Weber was swept away and has not been found, as he turned his back to the surging sea.
<h3>How is California Coping?</h3>
Now there is talk of what is going to be with California.  Crescent City seems to be most affected as the  north part of the state is being impacted by roiling the waters.  According to Josh Zulliger, (warden at the California Department of Fish and Game), “there are three-foot waves still coming in here.”  It is not surprising that it is Crescent City that is being impacted the most since it is known for being a very vulnerable area vis-à-vis tsunamis probably due to its underwater ridge offshore  as well as the shape of the harbor that “effectively bounces waves directly back into the line of incoming waves.”
So the boats are sinking in California.  Everyone has been so focused (naturally) on Japan following the earthquake and tsunami, that California hasn’t been in the press much recently.  But the waves ultimately sent over “an eight-foot swell into the enclosed harbor here, smashing dozens of boats.”  Clearly Japan’s disaster is having a worldwide impact, not just on markets and the economy, but also more directly on people and the potential danger to their lives.

California now has to find a way to pick up the pieces.  Japan has their own – greater – problems that will no doubt take a very long time (and lots of capital) to fix.  But it seems like the west is being affected too and places like Crescent City need to find their own resources to get back to normal as well.  The lesson from this is thus clear:  such an earthquake and tsunami is not just restricted to Japan, or even Asia, but will have a worldwide boomerang effect, especially on an already volatile global economy.

Market Mess in Japan? Too Soon to Tell

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Not surprisingly following Japan’s crazy earthquake and tsunami, the financial markets are in a sate of panic.  Finance leaders in the country are trying to calm the situation as the nuclear power crisis continued to worsen matters.  With an estimation according to Bank Credit Suisse of a loss of $171 billion, it’s no great shock that there is this panic. But the question being asked is how much do economists really need to panic?  According to Finance Minister Yoshihiko Noda said that it’s just too soon to make this kind of assessment vis-à-vis the economy.

Major Japanese Companies Close

When a country’s primary companies start to close down, there’s not likely to be a surge of confidence in the markets. Unfortunately since Friday’s travesties, Panasonic, Sony and Toyota Motor Co. have closed their production facilities.  As well, nuclear power plants have shut temporarily due to the possibility of reactors overheating.

Japan’s Biggest Crisis Since WWII

The earthquake and tsunami are being hailed as the country’s largest crisis since World War II.  Stock markets plummeted over 14 percent as the Fukushima nuclear power plant encountered two explosions. PM Naoto Kan didn’t have much to add, other than give out a warning that radioactivity levels had become ‘significantly’ higher.  This could lead to a cost of anywhere between 3 and 5 percent of output, which is extremely significant for a country that rates as the world’s third biggest economy.

Clearly Japan is going to take a long time to recover from last week’s events.  The question just remains, how much this will cost and what it will mean for the future of the country’s markets?  Only time will tell.