|Bid||5.39 x 1400|
|Ask||5.40 x 21500|
|Day's Range||5.33 - 5.41|
|52 Week Range||4.49 - 7.56|
|Beta (5Y Monthly)||1.28|
|PE Ratio (TTM)||5.08|
|Forward Dividend & Yield||0.37 (6.93%)|
|Ex-Dividend Date||Mar 27, 2020|
|1y Target Est||9.26|
(Bloomberg) -- Japanese banks face sharply higher bad loan costs due to the pandemic, but the damage is unlikely to show through in first-quarter earnings reports.The three largest lenders have already forecast credit costs will swell to an 11-year high of $10 billion in the year ending March 2021. Yet analysts predict actual expenses booked in the April-June quarter were relatively low because companies have been tapping credit lines and Bank of Japan loan assistance that will give them room to ride out the storm, at least for now.“Corporate borrowers have secured cash and they won’t go bust as long as they have it,” said Toyoki Sameshima, an analyst at SBI Securities Co.Bloomberg Intelligence analyst Shin Tamura echoed that line, saying credit deterioration at Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. may take time, thanks in part to government support. The Abe administration has unveiled 234 trillion yen ($2.2 trillion) in virus-related stimulus packages, while the Bank of Japan has introduced business lending programs worth as much as 90 trillion yen.Such aid has helped to keep bankruptcies and joblessness low in Japan, even after a state of emergency caused economic activity to plummet last quarter. But it remains to be seen how long the banks can hold off joining their global peers in making large provisions. Wall Street’s biggest lenders set aside $35 billion last quarter alone.“We expect bankruptcies to mirror the broader economic trajectory in the long term, and there is a risk of a sharp increase as government relief programs fade,” Fitch Ratings Inc. analyst Kaori Nishizawa wrote. That will hurt asset quality, pushing up credit costs through higher loan-loss provisioning, as well as eroding capital buffers, she said.The lenders also face the persistent headwind of rock-bottom interest rates, thanks to central bank monetary easing that has no end in sight. The rate on new loans in Japan tumbled to an unprecedented 0.448% in May, BOJ figures show.“Net interest income should continue to decline, with narrowing margins both in Japan and overseas,” Tamura said of Sumitomo Mitsui, which is first to report on Wednesday.Mizuho is scheduled to post its results on Friday, followed by MUFG on Aug. 4.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Moody's Japan K.K. has affirmed SMBC Nikko Securities Inc.'s A1 and P-1 issuer ratings. The affirmation of SMBC Nikko's rating reflects the company's (1) weak liquidity and solid funding; (2) weak, but relatively stable profitability, with its main focus on domestic businesses; (3) low risk appetite but high leverage; and (4) very high probability of affiliate and government support. The alignment of the ratings reflects Moody's view that SMFG and its major subsidiaries, including Sumitomo Mitsui Banking Corporation (SMBC, deposits A1/senior unsecured A1 stable, Baseline Credit Assessment a3) and SMBC Nikko, will benefit from the same very high probability of government support.
We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not […]
(Bloomberg) -- TDK Corp. sees a silver lining to the coronavirus pandemic in a boost to demand for its batteries and sensors in electronic gadgets and a long-term push toward greater use of tech in the auto industry.Once ubiquitous across cassette tapes and compact discs, the Japanese household name now provides batteries for one in three phones globally. Though TDK has seen revenue fall as U.S.-China trade tensions weighed on auto sales, the outbreak should quicken digitization across the home and industry and propel imminent demand for batteries in personal devices and long-term demand for sensors in connected cars, Chief Executive Officer Shigenao Ishiguro said in an interview.“Digital transformation is a huge opportunity for us and I have no doubt that the coronavirus will push the world to go that direction at a faster pace,” Ishiguro said.The CEO, who witnessed first-hand how the Thai floods of 2011 disrupted supply chains and quickened a transition from hard disk drives to solid-state storage, sees in the coronavirus outbreak a similar catalyst for change.TDK over the past decade and a half has reinvented itself as a purveyor of batteries for smartphones, but the global car market slump hurt its overall business. The company is coming off its first revenue decline since 2012, even though it remains a leader in compact power cells. TDK’s lithium-ion cells earned 600 billion yen ($5.6 billion) in the fiscal year ended March, having powered close to a quarter of all laptops, 43% of game console hardware and more than half of all tablets sold in 2019, according to Techno Systems Research. Demand for these device categories surged around the virus outbreak, according to IDC market researchers.For TDK’s battery division, “business opportunity can be found around every corner of the tech industry in a world with the coronavirus and 5G,” said Morningstar Research analyst Kazunori Ito. Growing product categories include drones, wireless earphones and smartphones with fifth-generation networking -- all of which require small-sized batteries that can provide reliable power for many hours. TDK’s Hong Kong-based subsidiary Amperex Technology Ltd. is widely recognized for having a technological lead on this front, said Ito, calling it “the absolute battery king.”Read more: Investors Are Favoring Firms That Let People Work From HomeBut TDK faces much more skepticism with the other wing of its business: sensors. The company offers magnetic sensors to aid stabilization of mobile cameras and MEMS (microelectromechanical systems) sensors used in noise-canceling headphones. Neither has managed to stand out in a fiercely competitive components market, said Ace Research Institute analyst Hideki Yasuda.Acknowledging the charge, Ishiguro said his most urgent task now is to bring that business up to speed before looking at additional M&A deals.“I moved things around to beef up our sensor business, and my top priority is to generate convincing returns from it,” he said. Ishiguro, who took the top job in 2016, oversaw the acquisition of U.S.-based MEMS specialist InvenSense Inc. the year after and is keen to prove that division’s worth.The auto industry presents another potent opportunity, as TDK’s magnetic sensors can be used at multiple spots around a car, from power-steering to windshield wipers. The Tokyo-based company’s technology is “already in a lot of car pipelines, including ones awaiting approval and ones waiting for mass production,” Ishiguro said. “In a not so distant future, our sensors will be the de facto standard in the car industry.”TDK in May forecast a 14% drop in its production for the auto market this fiscal year, as the industry battles the effects of Covid-19 and lingering trade tensions. But Ishiguro’s belief, shared by SMBC Nikko Securities analyst Hiroharu Watanabe, is that the upheaval is more likely to hasten automakers’ transition to smart electric vehicles and thus expand the market for component makers.“Tesla has adopted an upgradeable computer platform for its Model 3, which we can almost call a smartphone in terms of the semiconductor chips it equips,” Watanabe said. Daimler AG last week announced it will use Nvidia Corp.’s similar smart car technology in all its vehicles starting with 2024 models.Read more: Mercedes Will Use Nvidia Technology in All Cars From 2024For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Many of the world’s leading investors are concerned that the recent gains in the U.S. stock market are overdone, given the uncertain economic outlook and the risks of a second wave of the Covid-19 virus. But American equities are in very good company.Investing in U.S. stocks is “simply playing with fire,” Jeremy Grantham, whose firm GMO oversees about $60 billion, told CNBC on Wednesday. Ray Dalio’s Bridgewater Associates warned last week that a decline in U.S. corporate profit margins could lead to a “lost decade” for equity investors. And in a June 18 note, Howard Marks of Oaktree Capital Management LP wrote, “The potential for further gains from things turning out better than expected or valuations continuing to expand doesn’t fully compensate for the risk of decline.” No wonder the world is increasingly talking about bubbles.The 40% rally in the benchmark S&P 500 index, since it reached a low for the year on March 23, is “the fastest in this time ever,” Grantham said, as well as the only one in history “that takes place against a background of undeniable economic problems.” Nobel Prize-winning economist Paul Krugman wrote in the New York Times about what he deemed “market madness in the pandemic.”And yet the gains in the past three months aren’t restricted to U.S. stocks. Instead, they are mirrored in broader equity indexes. Even those that don’t have the benefit of a Microsoft Corp. (which has a 5.74% weighting in the S&P and is up 44% since U.S. stocks bottomed), an Apple Inc. (5.69% weighting, up 57%), an Amazon.com Inc. (4.3% of the index, 40% gain) or a Facebook Inc. (2.19% weight, up 60%) have recovered.The gains in Japanese stocks have matched those of the U.S., driven in large part by companies in sectors including machinery, marine transport and oil and gas — “an awful lot of dull, dirty, cyclical stuff,” as Jonathan Allum, a London-based strategist at SMBC Nikko Securities Inc., put it in a recent research report.Even regional European benchmark indexes, including the U.K. FTSE 100, Germany’s DAX index and France’s CAC 40 index, have staged rallies similar in size to the S&P 500’s. In fact, if you compare the price gains since the S&P reached its nadir for the year, Germany’s market index has even outpaced its U.S. counterpart.All of which suggests that the recent blaming of the U.S. market renaissance on so-called Robinhood Bros — U.S. day traders seeking to replicate the thrill of sports betting by gambling instead on stocks — misses the broader picture. There’s been a widespread comeback in equities across the geographical board. Moreover, it’s not just stocks that have come roaring back. In the debt markets, yields on non-government bonds have dropped precipitously, after spiking higher as the pandemic started to trash the global economy. For companies borrowing in dollars in the fixed-income market, money has never been cheaper, with the yield on the benchmark index covering $6.5 trillion of bonds declining to a record low in recent days, as the Federal Reserve began buying corporate debt as part of its quantitative easing program.Skeptics of the rally in financial assets can point to the real and present danger that a resurgence of virus infections, and further lockdowns, would stymie an economic rebound. There’s also the potential for shockwaves surrounding the forthcoming U.S. election.But more agnostic observers see the markets looking further ahead and weighing the massive intervention of central banks as the prime determinant of the outlook for equities. “While news headlines can make us think the second-wave and election stories are the biggest drivers for markets, it is the Fed story that will endure over the medium term,” Mark Haefele, the chief investment officer at UBS AG’s global wealth management unit, wrote last week.It seems that as long as the world’s central banks are willing to continue their prime-pumping efforts to stop the global economy from falling off a cliff, investors everywhere are happy to maintain their faith in the value of financial assets. Only time will tell whether they’ll be rewarded for their market piety.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Japan, the biggest taker of cheap dollar funding from the U.S. Federal Reserve during the coronavirus pandemic, is weaning itself off that supply as it shies away from emergency swaps and returns to now sedate interbank markets. When the Federal Reserve announced cheap dollar swap lines for global central banks in March as it tried to stave off a dollar funding crunch wrought by the pandemic, Japan was first out of the blocks. From April through this week, the Bank of Japan was the biggest user of that cheap funding, taking up as much as $225 billion or more than half of what was on offer, as a banking sector addicted to investing and lending overseas struggled to get the dollars it needed from interbank markets.
(Bloomberg Opinion) -- Pandemics shouldn't make small banks adventurous. Tell that to Japan's lenders.Shinsei Bank Ltd. is making its biggest overseas acquisition, buying a consumer-finance unit from Australia & New Zealand Banking Group Ltd. for the equivalent of about $480 million, according to a statement Tuesday from the Tokyo-based lender. Aozora Bank Ltd., also based in Tokyo, said in January it would purchase a 15% stake in Vietnam’s Orient Commercial Joint Stock Bank Ltd. for an undisclosed sum, its first foreign foray in more than a decade.Like the rest of Japan’s banking sector, the lenders are struggling with low interest rates and aging demographics that have depressed returns in their home market. It’s questionable whether seeking better growth opportunities overseas offers a path out of their troubles, though, especially when coronavirus lockdowns have devastated economies across the globe. Focusing on their domestic challenges may be a more sensible path.For Shinsei, there’s the added concern that it may be overpaying. The price Shinsei has agreed for UDC Finance Ltd., New Zealand’s largest non-bank lender, is more than the $461 million that HNA Group offered in 2017, before the country’s regulators rejected the bid because of the Chinese conglomerate’s opaque ownership structure. Before its debt-fueled buying spree attracted the ire of Beijing, HNA had acquired a reputation for paying over the odds.The UDC price equates to 1.2 times net tangible assets. Anything above 1 gives rise to goodwill, exposing Shinsei to the risk of writedowns if anything goes wrong. That’s a prospect that the lender, which itself trades at about 0.32 times forward book, can ill afford. Bad loan costs are set to surge for Japanese banks, and Shinsei estimates the acquisition will pare its capital adequacy ratio by 0.4 percentage point. At 10.8% post-deal, the ratio will be well below that of Japan’s biggest banks, according to Bloomberg Intelligence analyst Shin Tamura.Mitsubishi UFJ Financial Group Inc. booked a $1.9 billion one-time charge for the quarter ended Dec. 31 because of a drop in the share price of an Indonesian subsidiary. The megabank is far bigger than Shinsei and a savvier international investor.The ANZ unit purchase threatens to distract Shinsei from its strong consumer leasing franchise in Japan, where it’s one of the four big players alongside MUFG’s Acom, Sumitomo Mitsui Financial Group Inc.’s Promise, and Aiful Corp.Aozora’s strategy is open to similar objections. The bank plans to help Vietnam’s Orient Commercial with risk management and compliance systems based on international standards, and they will work together on digital banking and investment banking services, the Nikkei Asian Review reported in January. While the report valued the deal at only about $139 million, the investment will suck attention from its main business. Aozora has significant exposure to U.S. nonrecourse real estate lending, according to Michael Makdad, an analyst at Morningstar Inc. in Tokyo. Both Japanese banks have been reconstituted by overseas investors after earlier failures. Shinsei, formerly known as Long-term Credit Bank of Japan Ltd., was the first to be taken over by foreign private-equity firms when a consortium including Ripplewood Holdings LLC and J.C. Flowers & Co. bought the lender in 2000. Aozora was known as Nippon Credit Bank Ltd. before being taken over by Cerberus Partners LP.If the pair must do deals, perhaps they should consider reviving their merger that collapsed in 2010. At least that would keep their focus where it belongs. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Rating Action: Moody's assigns Counterparty Risk Ratings to 28 Japanese banks and branches. Global Credit Research- 21 May 2020. Tokyo, May 21, 2020-- Moody's Japan K.K. has today assigned Counterparty ...
Japanese stocks advanced in line with their Wall Street and Asian peers and hit a two-and-a-half-month high on Tuesday, as encouraging early-stage data for a potential coronavirus vaccine boosted hopes for a swift reopening of the global economy. Data from Moderna Inc's COVID-19 vaccine, the first to be tested in the United States, showed it produced protective antibodies in a small group of healthy volunteers, the company said on Monday. MSCI's broadest index of Asia-Pacific shares outside Japan last traded up 1.6% in late Asian trade.
Japanese shares rose on Monday as signs of a slowdown in coronavirus infections raised optimism that the government would soon ease restrictions in additional prefectures, although escalating U.S.-China trade tensions kept investors wary. The daily number of new coronavirus cases reported in Tokyo dropped to five on Sunday, the lowest since the capital was placed under a state of emergency on April 7. Japan lifted a state of emergency in large parts of the country on Thursday but said it would remain in place in Tokyo until the novel coronavirus was contained.
Tokyo stocks edged higher on Monday as signs of a slowdown in coronavirus infections raised optimism that Japan would soon ease restrictions in additional prefectures, although escalating Sino-U.S. trade tensions kept investors wary. The daily number of new coronavirus cases reported in Tokyo dropped to five on Sunday, the lowest since the capital was placed under a state of emergency on April 7. Japan lifted a state of emergency in large parts of the country on Thursday but said it would remain in place in Tokyo until the novel coronavirus was contained.
Mitsubishi UFJ Financial Group Inc (MUFG), Japan's largest lender by assets, forecast on Friday a full year profit that fell short of analysts' expectations on coronavirus-related credit costs. MUFG, which owns 24% of Wall Street investment bank Morgan Stanley, expects 550 billion yen ($5.14 billion) in net income for the year ending in March 2021, compared with an average 762.6 billion forecast of 12 analysts polled by Refinitiv. Annual net profit for the year that ended in March was 528.2 billion yen, compared with analysts' estimate of 668.3 billion.
Coronavirus is probably the 1 concern in investors' minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 […]
SoftBank Group Corp's talks to secure $3 billion from Japan's three biggest banks have stalled as the lenders have hit internal lending limits to the firm, two people said, complicating a $9.5 billion rescue package for WeWork. The Japanese technology conglomerate is now likely to enter the new year without the WeWork financing in place, the people said, adding the banks are also concerned about the risks involved in rescuing the U.S. office-sharing startup. Mizuho Financial Group Inc, Mitsubishi UFJ Financial Group Inc (MUFG) and Sumitomo Mitsui Financial Group Inc (SMFG) are seeking ways to provide the financing while offsetting exposure, the people said, declining to be identified because the information is not public.
Last year's fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing […]
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Sumitomo Mitsui Financial Group, Inc. Tokyo, December 03, 2019 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Sumitomo Mitsui Financial Group, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of SMBC Nikko Securities Inc. Tokyo, November 06, 2019 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of SMBC Nikko Securities Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
Successful investors are always balancing risk and reward depending on their own personal risk tolerance. One common metric used to gauge risk is price-to-book ratio, or P/B. A company’s book value is ...