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Fundamental Analysis: JAPAN
Marco Mecarozzi, 24.09.2013
Place | Date | Presenters name
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Japan overview
- Japan is an insland nation in East Asia located
in Pacific Ocean (strategic location). The four
largest islands in the archipelago are Hokkaido in
the north, the central and biggest one Honshu,
Shikoku and Kyushu in south.
- Climate varies from tropical in south to cool
temperate in north
- with virtually no energy natural resources,
Japan is the world's largest importer of coal and
liquefied natural gas, as well as the second largest
importer of oil
- Exposed to many natural hazards: many
dormant and some active volcanoes; about 1,500
seismic occurrences (mostly tremors but
occasional severe earthquakes) every year;
tsunamis; typhoons
Source: Wikipedia
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Data About Japan
•
Area: 377.915 km²
•
Population: 127.253.075
•
Density: 336.7 inhabitants / km²
•
Capital: Tokyo
•
Currency: Yen(JPY)
•
Gross Domestic Product (GDP) 2012 : 5.964 Billions USD
•
GDP Per capita 2012: 36.900 USD
•
Public Debt % to GDP 2012: 214,3% (2011: 205,3 %)
•
Unemployment Rate 2012: 4.4 %
Source: The world Factbook, CIA,
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Brief History of Modern Japan
• 1868-1912: a new constitutional monarchy was established, headed by the Meiji Emperor. The power of the shoguns
was broken (Modern Japan) and opened its doors to foreign influence (USA)
• 1912-1926: After the Meiji Emperor's death, his son became the Taisho Emperor. His chronic illnesses allowed the Diet
of Japan to democratize the country further. Japan formalized its rule over Korea and seized northern China during World
War I.
•1926-1989: The Showa Emperor, Hirohito, oversaw Japan's aggresive expansion during World War II, its surrender, and
its rebirth as a modern, industrialized nation.
•1989-present: Hirohito´s son, Akihito, succeeded to the throne (Heisei). 1989 marked the culmination of one of the most
rapid economic growth spurts in Japanese history (end of Japan's famed “bubble economy“). Subsequently, Japan
experienced the “Lost Decade”, which actually consisted of more than ten years of price deflation and largely stagnant
GDP as Japan's banks struggled to resolve their bad debts and companies in other sectors struggled to restructure. In the
beginning of the 21st century, positive growth has signaled a gradual economic recovery. On 11 March 2011, Japan
suffered the strongest earthquake in its recorded history; this triggered the Fukushima Daiichi nuclear disaster, one of the
worst disasters in the history of nuclear power.
Source: Wikipedia
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Politic Situation
•
Japan is a constitutional monarchy where the power of the Emperor is very limited since 1947. Japan's legislative organ
is the National Diet, a bicameral parliament.
•
The Diet is dominated by the social liberal Democratic Party of Japan and the conservative Liberal Democratic Party
(LDP). The LDP has enjoyed near continuous electoral success since 1955, except for a brief 11 month period between
1993 and 1994, and from 2009 to 2012.
After three years out of power, the Liberal Democrats (LDP)
returned to power after winning a sweeping victory in December
2012’s parliamentary elections.
The Liberal Democrats won 294 of the 480 seats in the lower
house.
Meanwhile, the LDP’s New Komeito allies won 31 seats, giving
the LDP-New Komeito coalition a two-thirds majority in the lower
house.
Liberal
Democrats
Democratic
Party
Restoration
Party
New Komeito
Your Party
Others
0
Source: Wikipedia
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100
200
300
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Human Development Index (HDI)
•
Human Development Index is a new way of measuring development by combining indicators of life expectancy,
education and income indexes into a composite human development index, the HDI.
•
Japan – Very High Human Development von 0,912 (10)
1.
2.
3.
4.
Norway 0,955
Australia 0,938
USA 0,937
Netherlands 0,921
5. Germany 0,920
25. Italy 0,881
9. Switzerland 0,913
26. United Kingdom 0,875
10. Japan 0,912
55. Russian Federation
20. France 0,893 81. China 0,699
Source: Human Development Report 2012
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0,788
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Japan HDI Composition
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Health Index
Expenditure on Public Health (% of
GDP)
Health Index
1.2
1
0.8
0.6
0.4
0.2
0
Health Index
10
9
8
7
6
5
4
3
2
1
0
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Expenditure on Public
Health (% of GDP)
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Life Expectancy
1. Monaco 89,68
3. Japan 83,91
9. Australia 81,9
10. Italy 81,86
12. Canada 81,48
14. France 81,46
28. Germany 80,19
30. UK 80,17
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51. USA 78,49
96. China 74,84
164. Russia 66,46
222. Chad 48,69
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Japan GDP Growth Rate (1980-2012)
The Gross Domestic Product (GDP) in Japan expanded 0.90 percent in the second quarter of 2013 over the previous quarter. GDP
Growth Rate in Japan is reported by the The Cabinet Office. Japan GDP Growth Rate averaged 0.52 Percent from 1980 until 2013,
reaching an all time high of 3.20 Percent in June of 1990 and a record low of -4 Percent in March of 2009. Japan's industrialized,
free market economy is the third biggest in the world. Japan has the largest electronics industry and the third largest automobile
industry in the world. Japan’s economy is well-known by its efficiency and competitiveness in exports oriented sectors, but
productivity is lower in areas such as agriculture, distribution, and services.
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Northeast Asia Economic Growth Outlook
(%) GDP Annual Growth Rates
15
10
5
0
-5
-10
China
Japan
South Korea
Taiwan
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
7,8
-2,0
-6,9
4,5
7,6
-0,1
9,5
5,7
8,4
2,9
8,5
5,8
8,3
0,2
4,0
-2,2
9,1
0,3
7,2
5,3
10,0
1,7
2,8
3,7
10,1
2,4
4,6
6,2
11,3
1,3
4,0
4,7
12,7
1,7
5,2
5,4
14,2
2,2
5,1
6,0
9,6
-1,0
2,3
0,7
9,2
-5,5
0,3
-1,8
10,4
4,7
6,3
10,8
9,3
-0,6
3,6
4,1
7,8
2,0
2,0
1,3
8,0
1,4
2,6
2,1
8,4
1,8
4,3
3,7
8,6
1,2
3,6
4,5
8,3
1,0
4,0
4,6
8,5
1,2
4,1
4,0
China’s economic growth slowed in recent years as export demand weakened. Japan
suffered a deep recession in 2011 as a result of the natural and nuclear disasters in that
country, but bounced back in 2012 and early 2013. Growth will remain below previous
levels across Northeast Asia over the near-term as export markets continue to struggle
Quelle: ISA (International Strategic Analyisis
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GDP Composition by Sector of Origin
•
Agriculture (1,1%):
- Agriculture (rice, sugar, vegetables, fruit, fish,
pork, except rice and eggs Japan is mostly dependent on imports for
food)
•
Industry (27,5%):
- motor vehicles
- electronic equipment
- machine tools
- steel and non ferrous metals
- ships
- chemicals
- textiles
- processed foods
•
Services (71,4%):
- banking
- insurance
- transportation
- telecommunications
Source: The world Factbook, CIA,
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Energie production in Japan
Electricity - production
937.6 billion kWh (2011 est.)
Electricity - production by source
fossil fuel: 60%
hydro: 8.4%
nuclear: 29.8%
other: 1.8% (2001)
Electricity - consumption
859.7 billion kWh (2011 est.)
Electricity - installed generating capacity
284.5 million kW (2009 est.)
Oil - production
131,800 bbl/day (2010 est.)
Oil - consumption
4.452 million bbl/day (2010 est.)
Oil - exports
366,800 bbl/day (2009 est.)
Oil - imports
4.394 million bbl/day (2009 est.)
Oil - proved reserves
44.12 million bbl (1 January 2011 est.)
Refined petroleum products - production
3.861 million bbl/day (2009 est.)
Refined petroleum products - consumption
4.464 million bbl/day (2011 est.)
Refined petroleum products - exports
366,800 bbl/day (2009 est.)
Refined petroleum products - imports
949,800 bbl/day (2009 est.)
Natural gas - production
3.397 billion cu m (2010 est.)
Natural gas - consumption
100.3 billion cu m (2010 est.)
Natural gas - exports
0 cu m (2010 est.)
Natural gas - imports
98.01 billion cu m (2010 est.)
Natural gas - proved reserves
20.9 billion cu m (1 January 2011 est.)
Carbon dioxide emissions from
consumption of energy
1.164 billion Mt (2010 est.)
Quelle: The world Factbook, CIA,
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PMI Japan (2002-2013)
Japanese manufacturing activity expanded in August for the sixth
consecutive month, as machinery makers and consumer goods
companies increased output due to solid domestic demand.
The Markit/JMMA Japan Manufacturing Purchasing Managers Index
(PMI) rose to a seasonally adjusted 52.2 in August from 50.7 in June, to
reach the highest level in two months.
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Japan Productivity (2000-2012)
Productivity in Japan decreased to 95 Index Points in June of 2013 from 98.20 Index Points in May of 2013. Productivity in Japan is
reported by the Japan Productivity Center for Socio-Economic Development. Japan Productivity averaged 88.41 Index Points from
1990 until 2013, reaching an all time high of 118.10 Index Points in March of 2007 and a record low of 67 Index Points in April of
1993.
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Japan Industrial Production (2002-2012)
Industrial Production in Japan increased 1.80 percent in July of 2013 over the same month in the previous year. Industrial Production in
Japan is reported by the Ministry of Economy Trade & Industry. Japan Industrial Production averaged 1.44 Percent from 1979 until
2013, reaching an all time high of 33.10 Percent in February of 2010 and a record low of -38.60 Percent in February of 2009
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Unemployment Rate Comparison
Source: U.S. Bureau of Labour Statistics
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Japan Unemployment Rate
Unemployment Rate in Japan decreased to 3.80 percent in July of 2013 from 3.90 percent in June of 2013.
Unemployment Rate in Japan is reported by the Ministry of Internal Affairs & Communications. Japan
Unemployment Rate averaged 2.69 Percent from 1953 until 2013, reaching an all time high of 5.60 Percent in
July of 2009 and a record low of 1 Percent in November of 1968.
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HICP, 16 Countries and areas, 1996-2012 (Annual indexes: 2005=100)
United
States
Year
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
84,1
85,8
88,7
90,8
91,6
93,7
96,3
100,0
103,2
105,9
110,6
109,7
112,4
116,8
119,4
European
Austria
87,2
88,2
89,0
89,4
91,2
93,3
94,8
96,1
97,9
100,0
101,7
103,9
107,3
107,7
109,5
113,4
116,3
Belgium Denmark
85,3
86,5
87,3
88,3
90,7
92,9
94,3
95,8
97,5
100,0
102,3
104,2
108,9
108,9
111,4
115,3
118,3
84,3
85,9
87,0
88,8
91,2
93,3
95,6
97,5
98,3
100,0
101,8
103,5
107,3
108,4
110,8
113,8
116,5
Union
United
France
84,9
86,4
87,5
88,5
90,2
92,2
94,1
96,0
97,9
100,0
102,2
104,6
108,4
109,5
111,8
115,2
118,3
86,6
87,8
88,3
88,8
90,5
92,1
93,9
95,9
98,1
100,0
101,9
103,6
106,8
106,9
108,8
111,3
113,8
Germany
88,6
90,0
90,5
91,1
92,4
94,1
95,4
96,4
98,1
100,0
101,8
104,1
107,0
107,2
108,4
111,1
113,5
Italy
81,8
83,3
85,0
86,4
88,6
90,7
93,1
95,7
97,8
100,0
102,2
104,3
108,0
108,8
110,6
113,8
117,5
Source: U.S. Bureau of Labour Statistics
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Japan Netherlands Norway
101,8
103,4
104,1
103,7
102,8
101,9
100,7
100,4
100,4
100,0
100,3
100,4
102,0
100,5
99,7
99,4
99,4
80,4
81,9
83,4
85,1
87,1
91,5
95,1
97,2
98,5
100,0
101,7
103,3
105,5
106,6
107,6
110,2
113,3
84,3
86,5
88,2
90,0
92,8
95,3
96,1
97,9
98,5
100,0
102,5
103,2
106,7
109,2
111,8
113,1
113,6
Spain
77,9
79,4
80,8
82,6
85,5
87,9
91,0
93,9
96,7
100,0
103,6
106,5
110,9
110,6
112,9
116,4
119,2
Sweden Switzerland Kingdom
87,5
89,1
90,0
90,5
91,7
94,1
95,9
98,2
99,2
100,0
101,5
103,2
106,7
108,7
110,8
112,3
113,4
100,0
101,0
101,8
104,2
103,4
104,1
104,2
103,4
88,1
89,7
91,1
92,3
93,1
94,2
95,4
96,7
98,0
100,0
102,3
104,7
108,5
110,8
114,5
119,6
123,0
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Harmonized Indexes of Consumer Prices (HICP)
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Japan Imports (2000-2012)
Imports in Japan decreased to 6744.04 Billion JPY in August of 2013 from 6985.99 Billion JPY in July of 2013. Imports in
Japan is reported by the Ministry of Finance Japan. Japan Imports averaged 3465.85 Billion JPY from 1979 until 2013,
reaching an all time high of 7542.58 Billion JPY in July of 2008 and a record low of 1450.21 Billion JPY in August of
1986. Japan main imports are: fuel (32 percent of total imports), machinery (19 percent), food (9 percent), manufactured
goods (9 percent), chemicals (8.5 percent), raw materials (8 percent) and clothing (4 percent). Main import partners are:
China (24 percent of total imports), United States (9 percent), Saudi Arabia (8 percent), Australia (7 percent) and South
Korea (5 percent). Others include: Germany, Qatar, Indonesia and Malaysia.
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Japan Exports (2000-2012)
Exports in Japan decreased to 5783.71 Billion JPY in August of 2013 from 5962.03 Billion JPY in July of 2013. Exports in Japan is
reported by the Ministry of Finance Japan. Japan Exports averaged 4065.32 Billion JPY from 1979 until 2013, reaching an all time high of
7681.69 Billion JPY in March of 2008 and a record low of 1192.54 Billion JPY in January of 1979. Exports of high technology products
have been the engine of Japan's economic growth since 1960. Main exports are: motor vehicles (21 percent of total exports); nonelectrical machinery, tools and mechanical apparatus (21 percent); consumer electronics and semiconductors (18 percent); chemicals (12
percent); iron and steel products (6 percent) and scientific and optical equipment (3 percent). Main export partners are: China (30 percent
of total exports), United States (15 percent), South Korea (7.5 percent), Thailand (4.5 percent) and Germany (3 percent). Others include:
United Kingdom, Netherlands, Australia and Singapore.
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Public Debt % to GDP (2012)
1.
2.
3.
4.
Japan 237,92
Greece 158,55
Jamaica 146,59
Lebanon 139,53
5. Italy 126,98
6. Portugal 122,99
7. Ireland 117,12
8 Grenada 112,5
Quelle: The world Factbook, CIA,
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9. Singapore 111,02
10. USA 106,53
11. Cape Verde 103,35
12. Belgium 99,60
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Japan Government Spending (2000-2012)
Government Spending in Japan increased to 102603 JPY Billion in the second quarter of 2013
from 101758.70 JPY Billion in the first quarter of 2013. Government Spending in Japan is
reported by the Cabinet Office, Japan. Japan Government Spending averaged 87676.01 JPY
Billion from 1994 until 2013, reaching an all time high of 102603 JPY Billion in May of 2013 and
a record low of 68733.80 JPY Billion in February of 1994
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Taxes
Total Tax revenue as a % of GDP
Taxes on incomes and profits as a % of GDP
Taxes on good and services as a % of GDP
Source: OECD (Organisation for economic cooperation and development
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Private Taxation Rate
Source: OECD
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Japan Stock Market (NIKKEI 225) 2000-2012
Stocks in Japan had a positive performance during the last month. Japan
Stock Market (NIKKEI 225), rallied 56 points or 0.39 percent during the last 30
days. From 1950 until 2013, Japan Stock Market (NIKKEI 225) averaged 9145
Index points reaching an all time high of 38916 Index points in January of
1990 and a record low of 85 Index points in July of 1950
Source: Tradingeconomic.com
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Japan Interest Rate (2008-2013)
The benchmark interest rate in Japan was last recorded at 0.10 percent. Interest Rate in Japan
is reported by the Bank of Japan. Japan Interest Rate averaged 3.21 Percent from 1972 until
2013, reaching an all time high of 9 Percent in August of 1980 and a record low of 0 Percent in
February of 1999.
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EUR/JPY Exchange Rate (2008-2013)
Source: finanzen.net
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EUR/JPY Exchange Rate (1 Year)
Source: Finanzen.net
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Foreign Investments in Northeast Asia
FDI Inflows (mil. US$)
160'000
140'000
120'000
100'000
80'000
60'000
40'000
20'000
0
Taiwan
South Korea
Japan
China
•
2000
4'928
9'283
8'323
40'715
2001
4'109
3'528
6'243
46'878
2002
1'445
2'392
9'240
52'743
2003
453
3'526
6'324
53'505
2004
1'898
9'246
7'816
60'630
2005
1'625
6'309
2'775
72'406
2006
7'424
9'047
0
72'715
2007
7'769
8'961
22'550
83'521
2008
5'432
11'195
24'426
108'31
2009
2'805
8'961
11'939
95'000
2010 2011 2012
2'492
0
3'205
10'110 10'247 9'904
0
0
1'731
114'73 123'98 121'08
Over the past decade, only USA attracted more foreign investments than China and this will probably
continue for the future as Chinese market is simply too attractive for foreign companies not to be present.
Meanwhile, Japan and South Korea both will see significant FDI inflows in the future
Source: ISA (International Strategic Analysis
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Investing in Japan
:
Why to invest in Japan?
•
Japan is recognized as a leading center for innovation and R&D, and has the potential to grow more and
more since exchanges of personnel, goods and money accelerate in Asia
•
Japan plays an important role as a "bridge nation" connecting Asia and the world, which contributes to
Asia's growth and makes this country full of business opportunities due to its strong ties with this rapidly
developing region.
•
Japan is a huge market with one of the world's largest economies. In addition, sectors with large growth
potential exist in Japan, including health and tourism markets.
•
Japan also attracts attention as a country with “soft power”, i.e. positive view of Japan in the areas of
fashion, contents, food and more.which sets trends for fashion and entertainment content in Asia. Therefore,
Japan offers a market for test marketing before entering Asian markets.
•
The new premier Shino Abe introduced several measures to stimulate Japanese economy collectively called
‘Abenomics’ . These are a series of easy-money policies to encourage consumer and business spending,
increased infrastructure investments and the devaluation of the yen to fuel exports. The policies appear to be
working, at least in the short term. The Nikkei 225 Index is up 64% in the past year, and Japan’s economy
grew by an annualized rate of nearly 4% in the first quarter, after contracting in 2012.
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Investing in Japan
Where to invest in Japan?
•
Environment: According to statistics from the Ministry of Economy, Trade and Industry, the Japanese
environmental market is predicted to grow from 59 trillion yen in 2005 to 83 trillion yen by 2015. Moreover the
Japanese people’ s interest has grown in the markets concerning energy saving and renewable energy as
a result of the electricity shortages caused by the Great East Japan Earthquake.
•
Automotive parts: Japan is one of the leaders in terms of the number of automobiles produced (third in 2012
ranking) and detains some of the biggest companies (Toyota, Nissan, Honda).
•
Healthcare: As Japan's population ages more rapidly than that of any other developed country, the
healthcare and welfare markets in Japan are expected to expand significantly in the future.
•
Retail: Japan boasts the world's second largest retail market, with a value exceeding US$1,124 billion. Japan
offers a market for test marketing before entering Asian markets.
•
Biotechnology: Japan's biotechnology market is the second largest in the world, after the U.S. The market is
expected to continue to grow due to factors such as the aging of society and increasing health awareness.
•
ICT: Japan is ranked 8 in IDI ranking (Information and communication technologies Development Index) and
has numerous IT clusters, areas where IT companies have concentrated. The ICT industry has broadened its
focus beyond manufacturing equipment to maintenance and management services as well as creating audio,
video, print and digital content. These developments are anticipated to create a variety of new opportunities in
Japan's ICT market.
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