Good news has just been reported for Tokyo this year is the doubling of investment in large Japanese blue-chip companies. Indeed combined stakes are now worth more than 1.6 trillion yen (which translates to $US19.4 billion). The stakes do seem somewhat passive (investors remaining tight-lipped on corporate strategy and management). But the stakes also show the escalating monetary ties between China and Japan as well as China’s increasing financial status. This is simultaneous to the eclipsing of the Chinese economy and the Japanese economy’s rise in status to second in the world.
During the second and third quarter of 2010, SSBT OD05 Omnibus Account Treaty Clients (a shareholder) made it to the top 10 shareholder registry of major Japanese companies (Toshiba is also on the list). Six months prior to this, this was not the case; the shareholder made a significant jump during 2010.
A Japanese airline (a conglomeration of All Nippon Airways and ANA) will begin low cost domestic flights in November and services to China next year. According to the Civil Aviation Administration of China (CAAC) over 5 million passengers were transported during the Spring Festival through domestic carriers, organizing close to 40,000 flights to meet increased holiday travel demand. Services will be expanded between Dalian in China’s Liaoning Province and Toyama, Japan to Beijing. Turkish airlines has grown, as well as Air China, the latter which transported 102,500 tons of mail and cargo. Hong Kong-based Cathay Pacific Airways – with its subsidiary Dragonair – last month transported 2.24 million passengers, 6.8 percent higher than last year. China Southern Airlines and China Eastern Airlines likewise reported a significant increase in passenger transportation over the last year. Spring Airlines will be using AsiaPay’s payment processing solution for its online flight booking, enabling clients to pay for tickets in local currencies.
In terms of airline partnerships, news is that first, China Harbor Engineering Company Ltd (CHEC, a subsidiary of China Communications Construction Company Ltd.) just clinched a US$1.22 billion deal for the construction of a new international airport in Khartoum, Sudan. Second, China Telecom Corporation Limited has entered into a strategic partnership with Hainan Airlines potentially enabling the latter to be “China’s first air carrier to provide in-flight phone calls and Internet.” New services will be added to Italian airlines too and a Tibet-based air carrier (Tibet Airlines) will be the first air-carrier in the region and will start its operation launching a Lhasa-Beijing service.
News from solar power is that China Solar Energy Holdings Ltd. will be acquiring domestic thin-film solar photovoltaic module maker Target Samoa for US$45 million in stock and convertible notes enabling the addition of amorphous silicon thin-film module production. Taiwanese Neo Solar Power Corp (NSP) said its revenues last month escalated over 150 percent and this trend looks set to improve. Volthaus GmbH (German solar power developer) is due to receive 20 MWp of solar modules in an agreement with EGing Photovoltaic Technology (Chinese module maker). There is good news in the solar cell market too in the country, with the use of Maple solar cell technology (broader and flatter silicon cells with fewer grain boundaries).
There is work on potential wind power projects via China Resource New Energy which recently stated it would put US$728 million to US$984 million in wind power developments in pursuit of 150 gigawatts of overall installed capacity by 2020. A US company CleanTech Innovations informed of its striking a wind tower supply deal from power producer China Guodian.
Recent world events – New Zealand earthquake, Japan’s credit rating downgrade and continued Middle East and Libyan unrest – led to a significant drop in stock markets across Asia. For example, South Korea’s Kospi, the Nikkei 225 stock and Hong Kong’s Hang Seng index all plummeted around 2 percent. As well, Japan had trouble dealing with its huge debt following Moody’s Investors Service downgrading its outlook for the country’s credit rating, citing “increasing uncertainty” over Japan’s capacity to effectively deal with rising debt. This doesn’t spell good news for the country which only last month had its sovereign debt rating cut by Standard & Poor. Australia, China, Singapore and Taiwan are currently in the same boat vis-à-vis stock markets. The only good news for the region of late has been the increase in oil prices.
Japanese and Vietnamese research teams are cooperating on a joint project to develop a clean and renewable natural resource from biomass.
The project, named “Sustainable Integration of Local Agriculture and Biomass Industries,” started in October 2009 and is to last for five years. It will be worked on primarily by researchers from the University of Tokyo (UT) and the Ho chi Min City University of Technology (HCMUT).
According to Dr Phan Dinh, the projects’ goal is to develop methods to produce biofuels, in particular ethanol, from biomass, which is essentially agricultural waste. This project is jointly funded by the Japanese and Vietnamese governments.
Japan’s largest investment house, Mitsubishi Corp., plan to invest in a liquefied natural gas (LNG) project valued at $2.8 billion through an Indonesian joint venture.
The investment will produce 2 million tons of LNG per year, starting in 2014. This project will bolster a decline in Indonesian LNG exports. Mitsubishi and Indonesia will share the expensive resource development costs.
Mitsubishi will have a 45 % stake in project. The joint venture will bring in another partner, Kogas, Korea Gas Corp, the largest purchaser of LNG, which will receive a 15 % stake. The name of the joint venture will be Donggi-Senoro LNG.
Donggi-Senoro project leader at Medco E&P in Indonesia, Lukman Mahfoedz, said that “The total investment includes infrastructure and land acquisition.”
Japanese banks are focusing on developing lending agreements In Malaysia and Indonesia, the fastest developing economies. Southeast Asia has a large population, a developing infrastructure and a many natural resources. Moody’s, noting Indonesia’s better debt position and it’s healthy economy, has acknowledged Indonesia’s potential by raising its rating.
Therefore, Japanese banks are creating deals with local lenders and are also enlarging their offices to increase their loan business in Malaysia and Indonesia. One of Japan’s largest banks, Sumitomo Mitsui Financial Group, will be expanding its employees in Malaysia from about 30 to approximately 100. In addition, it expects to increase employees in Indonesia from the present level of 200.
Mitsubishi UFJ Morgan Stanley Securities Co., chose Japanese stocks that it predicts will profit in the medium term to long term.
This list includes:
The camera manufacturer Canon Inc., which jumped 26 % in the last six months of 2010; Fanuc Ltd., Japan’s biggest industrial robot manufacturer that advanced 45 % 2010; Dentsu Inc., Japan’s largest advertising company that declared its non-consolidated net sales for December grew by 6.3 % from 2009 to today; Mitsubishi Chemical Holdings Corp., a chemical products manufacturer grew by 40 % last year.
Also on the list are: Denso Corp., an automobile parts manufacturer; Daiwa House Industry Co., a home-building company; FamilyMart Co., which operates a convenience-store chain; Rinnai Corp., which manufactures gas appliances; Asics Corp., which manufactures sporting goods; Nichicon Corp. which manufactures capacitors ; and Nippon Shinyaku Co., a health food and pharmaceuticals maker.
The chief equity strategist for brokerage, Chisato Haganuma, wrote “To invest selectively by looking at medium- and long-term profit for companies is key to increase return on investment in the next few years.”
The Bank of Shanghai will create a sales partnership with Sompo Japan Insurance Inc. the deal may be publicized on Monday.
The Chinese division of Sompo Japan will begin marketing policies to business clients through the Bank of Shanghai in early 2011.
The Bank of Shanghai will acquire insurance experience form its Japanese counterparts. Meanwhile, the Japanese company will increase profits through expanding into the rapidly growing Chinese market.
Thakral Corporation will partner as a financial investor with with developers to implement its new strategy for its real estate business.
In its filing with the Singapore Exchange, the company wrote that as a capital investor, it seeks to invest in affordable mid-sized residential developments located in cities in Asia Pacific and Australia.
Thakral indicated that its new strategy will generate a second revenue stream for the company.
The firm is seeking returns of 15 to 25 per cent, with an exit strategy in 12 to 36 months.
Mr Singh said, “We will receive our returns and capital when the projects are completed and all units already pre-sold to buyers are settled.”
Thakral already owns commercial and residential property holdings in Hong Kong and China.
In addition to real estate, Thakral also distributes consumer electronic products in Singapore, India, China and Japan.
South Korea’s GS Global Corp intends to invest USD 5 million in India’s Steel Strips Wheels. According to a top official at Steel Strips, This investment comes within a month of the Indian firm selling some of its stake to Japan’s Sumitomo Metal Industries.
Steel Strips makes wheel rims for auto makers. According to Managing Director Dheeraj Garg, it plans to use the funds to expand capacity at its Jamshedpur plant in Jharkhand. The deal will be signed on December 15. Dheeraj Garg said that “We will be expanding our project at Jamshedpur from 1 million units to 1.6 million.”