Perhaps one of the more significant events last week was that, finally, Abenomics is now officially an export!
Singapore’s SGX-listed NOL agreed to sell their logistics arm APL Logistics to Kintetsu Express (TSE) for around US$1.2 billion. Meanwhile, an even bigger transaction was announced in Australia with Toll Holdings (ASE listed) courted by Japan Post for an estimated USD$5 billion. Both suitors are Japanese, and both acquisition prices are at premiums the markets had not expected to see.
These developments, while unrelated, may have had their origins as far as four months back when the Japanese GPIF signalled - in what looked then as a coordinated follow up to an earlier massive BOJ stimulus announcement that day - that they will put half of their assets in equities, equally split between Japanese and foreign markets.
This would be up from 12% each under the fund’s previous strategy. Basically, this would mean adding almost US$150-200 billion into the global stock markets!
Source: GPIF Japan
With last week’s events, it seems that Japan Inc., is also following the calls by the Japanese government to seek higher returns elsewhere, anywhere.
Perhaps we are witnessing the beginnings of a similar trend we saw in the late 80s when Japan Inc. was active buying up overseas interests.
Basically, this cocktail of increased financial liquidity from the Japanese central bank, combined with the lack of domestic opportunities, is redirecting Japan Inc. to seek higher returns overseas.
Last week’s moves represent only the beginning of a new wave (or perhaps tsunami Potential candidates for these probable Japanese suitors will be simply busy ‘making up’ themselves for the rich premium they now hope and expect to see!
The N225, having broken through its key resistance of around 18,100 last week, looks likely to test its next level at roughly 19,000 and then possibly 19,700. Should the 18,100 level fail to hold, however, we could see it supported at around 17,250, followed by stronger support around 16,400.
Interestingly the YTD move on the N225 has NOT been accompanied by a similar degree of weakness in the JPY. Does this in fact signal that the JPY seems settled at this range of between 115 to 122 to the USD? If so, it would certainly offer foreign investors comfort in committing funds into Japan without having to deal with the usual dilemma of translation losses due to correspondingly weaker JPY.
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NOL Flash
Interest in NOL shares may continue this week. On the heels of last week’s announced sale of its logistics business at higher-than-expected prices, NOL may be in play this week again due to positive news related to its core liner business. Late Friday, it was announced that the US West Coast dockworkers and their employers reached a five-year contract deal. This averted a shutdown of 29 ports that could have cost the US economy and NOL heavily. In fact NOL’s recent earnings release blamed the industrial slowdown and subsequent congestion in the West Coast Ports - a major contributing segment of NOL’s container liner business - as a key reason for the slide in both quarterly and annual revenues for the company. NOL shares closed strongly, up 3% to $1.02 during last Wednesday’s half-day trade on the back of the Kintetsu/APL logistics deal. This new development from the West Coast Ports could offer traders a reason to bid up the stock again!IMPORTANT NOTE AND DISCLAIMERSMarket OpinionsAny opinion(s), news, research, analyses, prices, or other information contained on this website / document is provided as general market commentary and are from publicly available resources or otherwise obtained, and does not constitute investment advice nor does it seek to market, endorse, recommend or promote any investment or financial product. CMC Markets Singapore Pte Ltd. (Reg No./UEN: 200605050E) (“CMC Markets”) will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.Accuracy of InformationThe content is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. CMC Markets has taken reasonable measures to ensure the accuracy of the information, however, does not guarantee its accuracy, and will not accept liability for any loss or damage. CMC offers no financial advisory services in any of the content or vouch for the veracity of any information.DistributionThe content of this publication is not intended for distribution, or use by any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or products referred to or mentioned are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of the reader to ascertain the terms of and comply with any local law or regulation to which they are subject.Third PartiesCMC Markets may provide you with opportunities to link to, or otherwise use, sites and services offered through or by third-party(ies). 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It is to be noted that past performance is not necessarily indicative of future results. In this respect, past performance of a financial product do not guarantee any and are not an indication as to future performance; (d) the use and interpretation of this document require financial skill and judgement. Any utilisation whatsoever by the reader/recipient, relating to this document, as well as any decision which the reader/recipient may take regarding a possible purchase or sale of Shares, Stock Options, CFDs and similar and assimilated products, are the sole responsibility and liability of the reader/recipient who acknowledges and agrees to this as a condition precedent to and prior to any access to this document; (e) as a result of the above, all legal liability directly or indirectly arising whatsoever.
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