Steven Towns

Outlook for Japanese Stocks: A Rising Sun

Not quite feeling your optimism, and I still think the broader and deeper negatives far outweigh any incremental positives such as 7 Eleven opening up in Indonesia. And you should really take note that your figures for the DoCoMo - Oakmark deal and the size of Topix-1 are way off the mark: the former was a deal for Y31B or about $310M, not Y31T/$31B! The Topix-1 is definitely not $170B! At Y170T, it's more like $1.7T!

Japanese Equities: Land of the Relatively Rising Sun

Don, good article, and no doubt that EWJ has size and liquidity. Ironically, as I published recently (available on SA by searching ticker EWJ or my website at steventowns.com for those interested), its size and liquidity are exactly what did it in, or more precisely, what did in the Japanese equity market. The massive deleveraging last autumn handily took the N225 to a 26-year low. And relative yen strength has basically been the coup de grace for Japanese equities. I am not too excited about investment funds that are in the red but outperforming relatively. And in this case, any significant recovery for EWJ would necessitate a weaker yen, which would impact the fund's returns. I would be more interested in cherry picking some of EWJ holdings for accumulation and dividend reinvesting.

Japanese Exporters Look Poised to Profit from Weak Yen

Hi John,

Thanks for your comment and question. Toyota's ordinary shares (JP: 7203) are down about 4% ytd, compared to approx. -8% for its ADRs. The difference equals almost exactly the 4% weakening of the yen against the dollar ytd.

So why is Toyota down in its home market despite sustained growth and even surpassing GM by some measures? This is quite simply, in no particular order, due to (1) its run-up, almost doubling in the past two-years, (2) channeling of investment funds to overseas investments offering higher yields, (3) propensity to take profits quickly and frequently, (4) concern about the U.S. real estate market (inc. sub-prime) and slowing of overall U.S. economy, (5) higher gasoline prices hurting sales of higher margin autos, or at least boosting sales of lower margin autos in U.S.; weak domestic market w/ real growth only in the mini/sub-compact car (low margin) and luxury segments (high-margin, low volume), (6) uncertainty of FOMC policy, a rate hike would increase consumers' borrowing costs, (7) tough competition in BRIC economies, where Toyota has been somewhat of a late entrant, (8) high/rising commodity and materials costs mean imports and component costs are higher, possibly exacerbated by the weak yen, ....

There's a lot weighing the stock down, but it's not exactly tanking by any means. Obviously ADR holders are suffering more due to the negative forex impact.

Japanese Stocks in the "House of Pain" (EWJ, ITF, VPL)

Mike please see this post (click here) I just published that hopefully explains everything and let's you see the light. The key is the exchange rate and the underlying index (MSCI Japan).

A Look at Canon's Earnings and Guidance (CAJ)

Nikko-Citi Securities (Japan) raised its target on Canon from 10,000 yen to 10,900 yen on Friday. Canon traded 0.69% lower today in Japan largely over concerns about the strengthening yen.

Canon Reports Q4 Earnings -- Net Income Up 34% Sets New Record (CAJ)

For instance, I have no idea where S&P (see this link and pasted text below) is getting its Q4 2005 (period ended December) EPS numbers.



<blockquote><... (CAJ) : Ups to 5 STARS (strong buy) from 3 STARS (hold)
Analyst: Megan Graham-Hackett

December quarter EPS of US$1.08 vs 81 cents is above our $1.07 estimate, driven by new models of digital still cameras and inkjet printers released right before holiday season. We expect Canon to continue to leverage its market position in digital still cameras, copiers and printers, and to override price pressure through proactive cost reductions and product mix. We are raising our 2006 earning per American Depositary Shares estimate to $4.41 from $3.78, and see $5.07 for 2007, on improved margin. Our 12-month target price rises to $80 from $63.</blockquote>...

Canon Reports Q4 Earnings -- Net Income Up 34% Sets New Record (CAJ)

Tom, use this link (click here) to find CAJ's annual EPS (basic and diluted in yen and dollars). I subtracted the full year EPS from the YTD EPS (data from MSN Money) to arrive at quarterly EPS. Canon did not report quarterly EPS in its materials. I have seen different quarterly EPS numbers reported at different web sites and assume the discrepancies are based on the currency conversion rate used. Also some sites are still showing the EPS (TTM) as of Q3, not Q4. By the way, the number of shares outstanding are 888,742,779.

Japanese Co's Lead List of Firms Receiving Patents in U.S. (CAJ, MC, HIT, IBM, HPQ, INTC, MU)

I found out from researching the Japanese business press that Sony (SNE) held the number 10 spot in 2004 and subsequently fell out of the top 10 in 2005. IBM has been first for the past thirteen-years. Samsung has moved up from number nine in 2003, to number six in 2004 and number five in '05.

After Tuesday Morning System Glitch, Tokyo Stock Exchange Finishes Afternoon Up Big (TDK, MTU, KUB, SNE, CAJ, NIPNY, DCM)

See this link to a Yomiuri Shimbun article providing further coverage of the snafu yesterday morning on the Tokyo Stock Exchange that delayed the start of trading until the afternoon.