News & Insights

Recent News

Today's Pick

Jun 28, 2017
byAkane Hashimoto

Underperforming Japanese companies face intense AGM season Toshiba Chooses US-Japan Bidder for Memory Chip Biz SaleMitsubishi Motors CEO survives attempt to oust him "A matter of business, politics and governance. Larger scale funds and investor base are required, but corporate governance and fiduciary responsibilities need to be addressed  in advance." One Pension Fund Manager Is Going Against the Grain"Fiduciary duty of pension funds is a theme that had just started to be discussed. " Japan Inc says shrinking domestic market, worker shortage are biggest headaches"Demand for further production may decline, but demand for various new services may emerge." 

Read more

Recent News

Today's Pick

Jun 21, 2017
byAkane Hashimoto

"Transforming Japan Financial Services Agency's Supervisory Approaches", recommendation by the advisory group on supervisory approaches"For anyone who had not read this before." Japan Gains Ground on Wasteful Workaholics"Work style reform needs to be lead by the workers, not by the employers."

Read more

Noriyuki Morimoto's Blog

Japan Going Global as a Small Country

Jun 19, 2017
byNoriyuki Morimoto

The word global is used very often in Japan, as in globalization or development of global talent. But what does it mean to be global? There should be some kind of philosophy beyond superficial aspects like enhancing English capabilities, or economic phenomena such as multinationalization of companies or expansion of free trade. Being global is not the same as being international. International literally refers to the relationship among different nations. Global literally refers to the globe, a concept that transcends nations. The establishment of modern society was marked by the rise of the nation state. Ever since that happened, there has been a fundamental difference between the domestic relations among people of the same country and international relations among people of different countries. Meanwhile, to be global is simply about the relations among people. For a Japanese company, the idea of selling products to an American customer is international. Globally speaking, this is simply a company selling products to one of its customers. Globalization has to be this shift in the way of thinking. The global concept represents historical progress, advancement in human wisdom, and creative development of intelligence. Human history has long been a history of rule of violence. The rise of the nation state at least manifests the rule of reason within the country, but in turn justifies violence between countries in the form of war. Nevertheless, the advancement of globalization is likely to overcome the limitations of the nation state and ultimately achieve rule of reason in the form of a single global civil society. However far that day may be, it is sure to arrive: the direction of mankind is set towards that destination. If American companies are backed by their country’s overwhelmingly powerful military force when expanding into foreign markets, that is not global. It is global only when American companies expand worldwide purely based on business rationality. Globalization has to be the shift from the rule of power to the rule of reason. True globalization is in the horizon of social philosophy, not by physical force but by the force of intelligence. That is why Japan has a great opportunity, having abandoned active use of military power, being a small island country bound to shrink further through population decline, and having betted on establishing itself as a knowledge-oriented nation.

Read more

Recent News

Today's Pick

Jun 14, 2017
byAkane Hashimoto

Japan Inc’s silence over Toshiba sends chill across Tokyo "Cross share holding decreased to 10.3% in Dec 2015 from 34% in 1990. What's the outcome?" Fujifilm uncovers accounting discrepancies at Australian unit"Here, Fujifilm is announcing to tighten its subsidiary company management control." Japan to rein in regional banks' overexposure to bonds Japan to Require Regional Banks to Contain Bond-Holding Risk"Nikkei article shows more details on the policy and background."   

Read more

Recent News

Today's Pick

Jun 07, 2017
byAkane Hashimoto

Japan's 'Show Me The Money' Corporate GovernanceJapan's manufacturing growth picks up to three-month high on improving orders: PMIOECD urges Japan to improve work prospects for young people "Although potentially not enough, Japan had been trying to improve profitability over time. OECD messages do not seem to consider these efforts. " Japan's GPIF pension fund sues Toshiba auditor over investment lossesGov't pension fund seeks 3.5 bil. yen in damages from Toshiba auditor"GPIF have sued Toshiba for 13.2bn yen in June 2016 based on the loss they have born. Now  the auditor for 3.5bn yen.  First to sue an auditor." 

Read more

Noriyuki Morimoto's Blog

Learning Investment Philosophy from Basho

Jun 05, 2017
byNoriyuki Morimoto

Matsuo Basho’s famous haiku is about a small unidentified sound of water:Old pond — frogs jumped in — sound of water. It is unknown whether this scene took place during the day or at night, but it’s better to imagine it in total darkness. Even if it’s not dark, it has to be quiet. When you hear a strange sound in the dark silence, you are disturbed and stricken by anxiety. That anxiety dissolves when the sound is attributed to a frog. This haiku gains poetic value once it is interpreted as an expression of shifting emotions: anxiety caused by a mysterious sound of water, an attempt to remove that anxiety by attributing it to a frog, and afterwards, feeling a faint but lingering anxiety, given there is no way to confirm that a frog was really the cause. This emotional shift from anxiety to its removal through rationalization relates to investment philosophy, as investment also involves anxiety caused by the impossibility of finding an answer or describing the situation. The collapse of the euro, a plunge in Japanese government bonds, and the fear of war are potential causes. Strong anxiety creates a strong desire to describe, or to rationalize by explaining the situation. But what you gain through explaining is just the false sense that the situation has been explained. Thoughtless rationalization brings a thoughtless sense of security, which covers up the fundamental anxiety. Here is the investment philosophy we can learn from Basho. Indescribable anxiety has no choice but to be accepted. And we can only describe what we can. What we can describe is not the price shifts of the entire market that is so huge that we cannot even grasp its perimeters, but how we analyze the prices of individual, small and specific assets. It is possible to gain the ultimate strength of overcoming anxiety. Put simply, rationalization is different from conviction. Attributing a small water sound to a frog in a poetic context is one way of rationalization. But to assume the plunge of a frog based on experience and thorough training of distinguishing water sounds is a way of conviction. Practice, experience, repetition of thorough financial analysis, and artisan-like training to analyze the value of specific investment assets support the conviction to determine value. This conviction fights back the anxiety of market volatility and supports consistent management undeterred by changes in price. Conviction does not arise from intelligent maneuvers. An artistic capacity to face existential anxiety is needed for a poem to be more than a word game. For investment to be more than a word game and truly an investment, you need to have the capacity to ignore critics’ rationalization of price volatility, and to keep true to your own conviction as an experienced professional.

Read more

Recent News

Today's Pick

May 31, 2017
byAkane Hashimoto

BAT's Glo Roll-Out in Japan Sets Up Three-Way War for SmokersJapan Tobacco plans to quadruple smokeless tobacco output capacity by 2018: CEO"PMI, BAT and JT ready to compete on smokeless tobacco." Will FinTech create shared values? - speech by Nobuchika Mori (May 25, 2017)"I believe we at the Financial Services Agency of Japan, JFSA, should plan how we can secure a regulatory environment that is conducive to sustainable economic growth and financial stability with the possibility of a major FinTech revolution in mind. " Finalization of Japan Stewardship Code"Must read for investors in Japanese companies. " 

Read more

Recent News

Today's Pick

May 24, 2017
byAkane Hashimoto

Secom breaks ranks to highlight reform failures of Japan Inc "Very committed managements, others to learn from them. "

Read more

Noriyuki Morimoto's Blog

On Not Finding any Attractive Investment Trusts in Japan

May 22, 2017
byNoriyuki Morimoto

A short while ago, I attended a gathering of industry peers at which a representative from a major asset management company delivered some words that I would not forget. What he mentioned was about the current state of Japan’s investment trust industry: “The biggest problem is that there are absolutely no products that we as professionals would want to buy”. This is very true, precisely pointing to what‘s wrong with Japanese investment trusts. But at the same time, it’s not. It’s ethically wrong if the representative of a manager of investment trusts can offer things he doesn’t want to invest in with a straight face to his customers. Before discussing the problem with investment trusts, it’s against business ethics. Whatever you sell, whatever its value measured by your clients, you have to have confidence in its benefits in order to make the business an ethical foundation. An economically viable business is established only on top of this ethical foundation, and when the value of the product from your and your clients’ perspectives match at some point. Investment trusts are not an exception. Many people have special attachments to certain hobby items, such as audio equipment, cars, motorcycles, or cameras, and they are likely to be supporters of certain manufacturers. Those manufacturers might be the ideal workplace for them. There is no joy above creating things you love, and earning a livelihood by selling them with confidence to your customers. The people who purchase such products naturally share values with the people who sell them. A business built on top of this kind of relationship is a source of long-term sustainable profits: it is a classic case of commerce at work. Of course, businesses do not generate sustainable profits for being ethical. They do so because they realize a shared value with the customer. The realization of shared value with the customer forms an ethical base that makes the business sustainable. In other words, commerce is not equal to ethics, but there should be no commerce that runs against ethics. Coming back to Japanese investment trusts, they are unlikely to be sustainable given that they are contradictory with business ethics. This is one reason the Japan Financial Services Agency launched a major overhaul for investment trusts to become a commercially viable product. It is only natural that the core measure is thorough implementation of fiduciary duty.

Read more

Recent News

Today's Pick

May 17, 2017
byAkane Hashimoto

Boeing’s key suppliers in Japan want an upgrade "Aichi Prefectural Government had established "Secretariat of Promotion Council for Special Zone to Create Asia's No.1 Aerospace Industrial Cluster"" Japan 'toushin' funds see outflows after reprimand from FSA"FSA's commitment to improve the market is real." Japan Post looking to buy Nomura’s stake in real estate unit: sources"Nomura seems to be urging to restructure their business units." 

Read more

Recent News

Today's Pick

May 10, 2017
byAkane Hashimoto

Publication of the report by the Working Group on Financial markets Under the Financial System Council - Initiatives toward Stable Asset Building and the Development of Institutional Systems related to Markets and Exchanges - "English translation now ready." Bitcoin Traded at High Premium of $1,835 in Japan: Reasons & TrendsPhilip Morris says it has doubled supply of iQOS tobacco device in Japan"Japan should be open to new products and ideas." How things got ugly for some of Japan's biggest brandsToshiba’s startling spiral downwards continues Another Toshiba debacle awaits in Japan?"Not only business environment, but a number of governance related issues. No more Toshiba." 

Read more

Noriyuki Morimoto's Blog

On Not Enjoying Work in Japan

May 08, 2017
byNoriyuki Morimoto

Fraudulent business is sustainable if the people involved don’t think it’s fraudulent. But when the customer is emotionally harmed at some point, that sustainability is lost. When you know well as an insider that the product you offer is not good, you would normally not have the emotional durability to keep offering it as a good product. Things continue because they come with joy and without harm to the society: they wouldn’t last if they are totally joyless, and even if they do, the occurrence of social harm would put an end to them. We enjoy our work when we create good things and our customers enjoy them, and that joy ensures that there is no social loss. Such a business is likely to generate sustainable profits. Reforming the working style is a hot topic in Japan, but it seems to be perceived as the effort to reduce working hours. However, this is really not an issue of making working hours shorter, but one of the emotional length of labor. If you keep on doing joyless, menial labor for many hours, you become exhausted more emotionally than physically. Fun times fly past, while boring times drag on. The question is how to make labor enjoyable. You’re likely to enjoy offering what you love and believe in to your customer. At least there should not be any emotional burden of contradicting yourself. By contrast, wouldn’t it be a cause for pain and psychological illness if you are forced to offer something you lack confidence in, of which faults you know well, and dislike, just to make a living? The suicide of an employee following excessive working hours at Dentsu, a major advertising agency, became a big social issue. It was also a trigger to push forward the working style reform. So what is an advertisement? Is it a way to make faulty products sell better by making false claims to its quality? It’s understandable that one would want to commit suicide if forced to engage in such futile effort over long working hours. True advertising should be to unleash the potential demand that exists only for a good product. The true client of an advertising agency is not its direct clients, but their customers. It may not always be fun and may sometimes be hard to strive for the client’s satisfaction. But it’s probably fun to think advertising from the ultimate customers’ perspective. At least it should not be a torture. Dentsu has probably lost its advertising philosophy. There is no future for Dentsu if it has lost perspective of its true customer and continues to make ads solely to satisfy its direct clients, thereby forcing its employees to work painful and excessive hours.

Read more

Load more

Page Top