BOJ chooses slow path out of zero-rate limbo 31 Oct 2023 Japan’s central bank again tweaked its policy to permit slightly higher yields on 10-year government bonds as it inches back to positive interest rates. The snail’s pace is understandable. Yet with bond yields rising across the developed world, it remains a loose-money outlier.
Japan Inc is only winner in nixed chip deal 27 Oct 2023 The collapse of Kioxia-Western Digital merger talks is bad for the two struggling companies, complicates Bain’s exit strategy and highlights investor-rival SK Hynix’s conflicts. But Tokyo now seems more open to cross-border deals, even for national champions. That’s a positive.
China’s leaders speed towards Japanisation 20 Oct 2023 The People’s Republic invests more than Japan did at the height of its 1980s asset bubble. China’s real estate is more overvalued, and its debt is higher. President Xi Jinping’s centralised rule and stifling of private enterprise increase the risk of Japanese-style lost decades.
India and Japan will be Asia’s next power couple 19 Oct 2023 Modi and Kishida's governments partner on security and are setting up a $600 mln fund to co-invest in green infrastructure. It's a fresh sign that financial ties, including potentially on cross-border commodities M&A, may flourish to match the strengthening geopolitical bond.
KKR’s Japan chip gear IPO clears high first bar 18 Oct 2023 Kokusai’s $720 mln float is the country’s largest in five years and coincides with the bottom of the semiconductor cycle. Pricing was cautious and two investors bought nearly half the offer. But with war drums beating, Japan’s elongated, inefficient listings process is in focus.
Japan’s inertia leaves yen at the mercy of the Fed 5 Oct 2023 It’s unclear if officials just intervened to stem currency losses but the debate ignores the bigger issue: The interest rate gap between the two countries will keep boosting the dollar. Unless Tokyo tightens policy, the US central bank will drive foreign exchange moves.
Arm’s IPO valuation rests on big dose of hope 7 Sep 2023 The SoftBank-owned chip designer is getting ready to list. In this Viewsroom podcast, Breakingviews columnists argue that even the company’s reduced price tag of $50 bln is still far too high, and debate what investors would have to believe to buy the shares.
SoftBank’s reduced Arm price tag is still too high 5 Sep 2023 The Japanese group may float its UK chip designer for $50-54 bln. That’s lower than initially hoped, but still implies an implausible future where revenue and profitability soar. If Arm merely grows at recent rates and nudges up margins, its market worth is more like $35 bln.
Nvidia gives Arm IPO a double leg-up 4 Sep 2023 The $1.2 trln semiconductor designer’s AI-inflated stock price provides a following wind for the UK group’s float. Now Nvidia and two peers may endorse its valuation by buying into Arm’s offering. Owner SoftBank will be hoping other investors buy into the somewhat circular logic.
SoftBank could live with a cut-price Arm IPO 30 Aug 2023 The Japanese conglomerate wants a $60-70 bln price tag for the UK chip designer, according to reports. But it has reasons to push on even at a lower value, in part because a float would boost the parent group’s creditworthiness. That gives investors an incentive to play hardball.
Arm’s changing business model is wildcard for IPO 24 Aug 2023 As well as jumping on the AI bandwagon, SoftBank’s soon-to-float chip designer has altered the way it charges big customers to boost growth and smooth out revenue. If it works, a valuation north of $60 bln looks slightly less implausible. But investors lack evidence so far.
Arm’s IPO risks shine brighter than its potential 22 Aug 2023 SoftBank’s chip group is leaning on the artificial-intelligence boom to justify a hoped-for float valuation north of $60 bln. There’s no evidence to support that in the numbers, which show lumpy, shrinking sales. China risks and lack of investor control also call for a discount.
SoftBank Arm deal is expensive gift to Vision Fund 21 Aug 2023 Masayoshi Son’s group bought 25% of the chip designer from its Saudi-backed investment vehicle. It puffs up the fund’s poor returns, but betrays a lack of confidence in an upcoming float. A pricey $64 bln valuation means Son’s fellow SoftBank shareholders will probably lose out.
Rate jujitsu is no blow to Japan’s foreign assets 4 Aug 2023 The central bank’s shock tightening of monetary policy last week sparked fears investors would rush to repatriate the $5.4 trln of assets they hold overseas. Low yields at home and funds’ caution after years of disappointment will ease any tide. Big debtors like the US can relax.
Toyota tops up tank to fuel a hard drive 2 Aug 2023 Rising sales helped net income surge ahead by 75% in Koji Sato’s first quarter behind the wheel of the $230 bln Japanese carmaker, pushing the stock to an all-time high. To keep up the pace, though, he has to speed electrification and outpace competition from China and beyond.
Japan will gain from ultra-cautious ratesetters 27 Jul 2023 The world’s third-largest economy is on the cusp of a virtuous circle where inflation lifts wages and spending. But the central bank needs to tread carefully. If it prematurely declares victory and tightens policy, it could spur a debt rout. The cost of waiting is also growing.
Morgan Stanley and MUFG’s next act is well-timed 19 Jul 2023 The duo will collaborate on equities and currencies as their 15-year alliance evolves. With global interest in Japan driving up stocks as Tokyo toughens its stance on governance and amid a welcome return of inflation, the partnership will become even more the envy of its peers.
Sony’s Microsoft truce marks new gaming reality 17 Jul 2023 After opposing its US rival's $69 bln Activision buy, the Japanese group signed a deal over the latter's "Call of Duty" title. It will help Microsoft appease regulatory holdouts, but Sony benefits too. Boss Kenichiro Yoshida can now focus on how to outplay the sector's behemoth.
Macau wannabes risk being short of gamblers 29 Jun 2023 Japan and the UAE will soon have legal casinos; Thailand may follow. In theory Wynn, MGM and peers will have around $12 bln of new annual revenue to play for, more than Macau has raked in this year. But newcomers can’t rely on Chinese punters and their home markets are untested.
Masayoshi Son’s new AI push merits a pinch of salt 22 Jun 2023 The SoftBank founder said he would place further bets on artificial intelligence after taking a pause. Some of his investments may pay off. But Arm is his only real AI win from a $112 bln portfolio, his credibility has taken a knock, and his war chest is smaller than it looks.