China’s real estate trophy hunt has further to run 8 Oct 2014 The $2 bln sale of New York’s Waldorf Astoria hotel to a little-known Chinese insurer echoes Japan’s U.S. property binge in the 1980s. But outbound investment from the People’s Republic is much lower than Japan at its peak. Expect China to add more landmarks to its portfolio.
Pacific trade pact has to jump some high hurdles 7 Oct 2014 If it ever arrives, the Trans-Pacific Partnership will be a landmark agreement between a dozen countries on four continents. It’s a big if. America and Japan are struggling with tough issues. And even if they manage to agree, U.S. politicians could be harder to persuade.
China has two bad role models on dealing with debt 6 Oct 2014 Japan’s government shouldered the pain of corporate deleveraging, and the economy became comatose. South Korea crammed its debt onto households with only marginally better results. Now it’s China that has a problem with high leverage. The race is on to find a different strategy.
SoftBank and Shrek may lack on-screen chemistry 29 Sep 2014 The Japanese conglomerate may offer $3.4 bln for movie studio DreamWorks Animation. Softbank’s giant balance sheet can easily absorb the hit-and-miss earnings of film production. But with each big acquisition, it becomes less clear how the group’s parts fit together.
Starbucks avoids froth in $913 mln Japan buyout 24 Sep 2014 The U.S. coffee chain is buying the 60.5 pct of its Japanese business it doesn’t already own at a discount to the unit’s market value. Expiring licenses give Starbucks a chance to take control of a large market on the cheap - as long as minority shareholders don’t resist.
Japan’s revival faces paradox of thrift 23 Sep 2014 Higher sales taxes have crushed consumption, forcing Tokyo to lower its assessment of the economy. The Bank of Japan’s money-printing and the weaker yen cannot reverse the savings glut. The government needs a short-term fiscal boost to prevent a setback from becoming a slump.
Alibaba IPO highlights SoftBank’s value dilemma 22 Sep 2014 Following the Chinese e-commerce group’s listing, the Japanese conglomerate’s 32 pct stake is worth $75 bln. It eclipses the value of SoftBank’s core businesses. The near-5 pct drop in SoftBank’s shares after the IPO is a reminder the investment is both blessing and burden.
Crisis at Sony could spark long-overdue change 17 Sep 2014 The Japanese electronics group has written down the value of its ailing mobile unit. Full-year losses are likely to hit $2.1 bln. Cancelling the dividend for the first time since 1958 suggests a grim outlook. The calamity may finally force Sony to confront its problems.
India in depth: How not to get swamped by capital 17 Sep 2014 Japan wants to invest $34 billion in India. China’s pledge could be several times as large. Realizing these commitments, and digesting up to 12 percent of GDP in foreign capital over five years, will be tricky. The People’s Republic’s own growth strategy offers a useful template.
Henry Kravis spins a different kind of club deal 16 Sep 2014 The buyout baron’s KKR is buying Pioneer’s DJ audio equipment business for $550 mln. It’s Abenomics meets Ibiza for the private equity firm’s latest trendy investment. Kravis is laying down a smooth groove in a funky M&A market, but could be late to the dance music party.
Rakuten’s $1bln U.S. buy stretches loyalty logic 10 Sep 2014 Buying U.S. cash-back site Ebates will more than double overseas transaction volumes at Japan’s largest e-commerce firm. It underscores Rakuten’s plan to use its loyalty scheme to distinguish itself from rivals. Yet, as with past deals, it’s unclear how the parts fit together.
Japan index: Abe’s tax hikes an ever-tougher sell 9 Sep 2014 The Breakingviews Abenomics Index stalled in July. Inflation expectations waned, and wages were flat. If the weakness persists, Prime Minister Shinzo Abe will find it hard to raise the sales tax rate a second time next year, and that could delay much-needed fiscal consolidation.
Japan’s $34 bln pledge unmasks Modi’s growth ploy 2 Sep 2014 The new Indian leader has bagged a fat five-year investment commitment from his Japanese counterpart. India will buy foreign-made equipment in return for creating local jobs. Japan’s promise will embolden Narendra Modi to look for similar deals with China and others.
Asia’s top-down corporate reforms vary in promise 25 Aug 2014 Newish leaders across the region are pushing to change the way companies work. Although the mechanisms and targets vary between countries, increasing efficiency appears to be a common theme. But investors eyeing improved returns will find not all reforms are equal.
Japan’s pension fix needs workers to toil longer 15 Aug 2014 Prime Minister Shinzo Abe wants funds to earn higher returns by switching into equities. But with life expectancy already above 80, sweating existing assets won’t suffice. Nor will overburdened workers pay more to expand the kitty. Raising the retirement age is Japan’s best bet.
Japan’s GDP sacrifice is price well paid 13 Aug 2014 The 6.8 pct drop in second-quarter output was a direct consequence of the country’s April sales tax increase. But for Prime Minister Shinzo Abe, taking a temporary hit on private demand was an acceptable cost of mending public finances. Besides, a recovery may have already begun.
SoftBank’s U.S. mobile retreat is least bad option 6 Aug 2014 The Japanese group has bowed to hostile regulators and scrapped its Sprint unit’s $32 bln takeover of T-Mobile US. Withdrawing avoids months of antitrust limbo and leaves open the option of a future deal. For now, SoftBank’s ambitions in American mobile will be more modest.
Line’s $13 bln valuation shows chat app exuberance 31 Jul 2014 The Japanese chat app reported a 26 pct jump in revenue from the previous quarter, pushing up valuation expectations ahead of its planned IPO. Yet Line’s valuation hangs on an assumption that new overseas users will spend like those back home. That seems like wishful thinking.
Nomura trading prowess demands fuller explanation 29 Jul 2014 The Japanese investment bank’s fixed-income arm is unfazed by broader gloom. Revenue increased 7 pct in the latest quarter. The lack of an old, bad trading book probably helps. It’s hard to tell, though, just how Nomura outflanked rivals, and thus whether success is sustainable.
Japan’s bond-hugging banks are pinning Abe down 22 Jul 2014 Lenders’ $3 trln holdings of public debt are not falling fast enough. That could be problematic for the prime minister. Once monetary stimulus dries up, banks may rattle the financial system by turning panic sellers. Bank of Japan minutes show Shinzo Abe’s team knows the risks.