Fidelity Eyes $6 Trillion in JP Banks -- How You Can Play a Changing Japan (MTU, NMR)

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Includes: MTU, NMR
by: Steven Towns

Imagine having a savings account that yields 0.001%. Then imagine 742 trillion yen (US$6.3t) of cash sitting in these "savings" accounts. That's the situation in Japan and how things have been for quite a while now with the BOJ's super-easy monetary policy. A Bloomberg article from Friday discusses how Fidelity Investments plans to go after these funds and quadruple its assets under management for Japanese individuals and companies to US$100b in five years. Great, so how can all of us take part in this?

The easiest and most affordable way is to look at the ADRs of Mitsubishi UFJ Financial Group (MTU) and Nomura Holdings (NMR). Even though Fidelity will be trying to tap money that currently sits in MTU bank accounts, it's MTU's money to loose and you can bet it is not willing to let it get away without a fight. Personally, I like Nomura because of its other businesses such as advising in M&As, underwriting IPOs, and its coming April launch of a discount on-line brokerage. At any rate, both are aggressively trying expand their assets under management and cater to both a coming surge in retirees and sharp increases in the number of new graduate hires.

You can click on the above hyperlinks for MTU and NMR to read recent coverage of their earnings and activities.

Here are few interesting points from the Bloomberg article:

• One in every four Japanese will be aged over 65 by 2014

• To deal with the increasing proportion of elderly dependents to working population, the Japanese govt. in Oct. '04 started to increase individuals’ pension contributions and may still have to delay the age of pension payment eligibility beyond 65.

• As of last September, some 742 trillion yen ($6.3 trillion), or 53 percent of Japanese individuals’ financial assets, were held in bank accounts

• 3 percent in mutual funds

• 3 percent in bonds

• 10 percent in stocks

MTU 1-yr chart:


NMR 1-yr chart:


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