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Real GDP down -0.1% Nominal GDP flat
(February 16, 2005) |
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Our take: This is the
continuation of the weakness that we forecasted |
Japan real GDP growth down to 0.1% in third
quarter from 0.4%
(November 10, 2004) |
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Our take: This is the
continuation of the weakness that we forecasted |
Japan Nominal GDP falls in second quarter
by 0.25% (August 13).
Real GDP up 0.4%, deflator of 0.65% indicates persisting deflation. |
Our take:
This, unfortunately, tends to confirm JMC analysis that the
current improvement in the economy is only temporary as fundamentals
will remain weak as long as there is no change in Japan government
policy. |
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Daiei seeks help from IRCJ
(August 6) |
Our take:
Another important step in the right direction. The 3
major banks lender to Daiei: UFJ, Mizuho, SMFG, have finally decided
to call on IRCJ. IRCJ is finally living up to its promise to
rehabilitate major "quasi bankrupt" companies. Daiei currently has
about 1 TY (around 10 B$) of outstanding loans. |
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SMFG (Sumitomo Mitsui Financial
Group) makes an offer to UFJ to enter merger talks. UFJ flatly
declines (July 31) |
Our take:
This mark the first instance of takeover battle in the Japanese
financial establishment. Hostiles bids seems (at last) to become
accepted in Japan.
This is positive progress. |
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BOTM and UFJ in merger talks
(July 14) |
Our take:
Merger talks between 2 of the 4 major Japanese banking group is
confirmation of our analysis that bad loans problem is not over yet.
It is UFJ high bad loans ratio that is the trigger of these merger
talks (See our bank results
page) . UFJ had already tried to bolster its capital through the
sales of A Plus. (see news below) |
UFJ to sell Consumer Finance
firm A Plus to a foreign buyer: GE Capital or Citibank Group are on
the list (June
6)
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Our take:
This is a typical illustration of the pattern that we have seen and
are expecting to become more common. Japanese bank cannot support
anymore deeply indebted company (A Plus has 650 BY interest bearing
debt) and are selling their participation (UFJ holds about 40% of A
Plus) and debt to foreign investors. It is a great investment
opportunity for a company with expertise in consumer finance such as
GE or Citibank. |
Ripplewood sell Japan Telecom
to Softbank for 3B$
(May 31)
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Our take:
Ripplewood sold for 3B$ a company that it bought one year ago for
2B$ making a 1B$ capital gain in less than one year. Close to 50%
return!
This deal also makes a lot of sense for Softbank that will be able
to offer point to point services to customers thanks to its existing
local networks. |
Japan bad loans at 4 major banking
groups have declined to 14TY on March 2004 or 6.8TY less than a year
earlier. Meanwhile, bad loan ratio fell from 7.2% to 5.2%
(May 24).
Results of Japan main banks click here
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Our take:
As expected, major banking groups have followed Ministry
instructions and reduced their official bad loan figure. We remain
convinced that many more "hidden" bad loans remain on banks balance
sheet. |
Japan Q1 GDP grows by 1.4% from Q4
(May 18)
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Our take:
This GDP reading confirms the temporary improvement due to external
factors. Although the domestic demand grew by 1.1% in this quarter
it remains to be seen if it can become the engine of growth. The
nominal growth of GDP is 0.8% pointing with a GDP deflator of 0.6%
which marks the persistence of deflation. |
Nikkei falls 500 points on Monday
May 10
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Our
take:
This is one of the first crack in the rosy picture presented by
Japanese government. We believe that the current real improvement in
business conditions is the results of improving conditions abroad
and is not the results of a real improvement in Japanese economy
which is continuing on its slow growth mild deflation trend. |
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