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Today's Pick

Aug 16, 2017
byAkane Hashimoto

Japan's Biggest Bank Is Looking for Overseas Talent"Diversification should support innovation. Wonder why this did not happen earlier, but good path." Japan posts longest unbroken growth streak in more than a decade Japan Posts 4.0% Annualized GDP Growth in April-June Quarter"NHK news was describing that this was partially led by white goods sales after a 7 years cycle." Tokyo Stock Exchange takes aim at Japan’s corporate ghosts "Let's expect positive impact through this wave." 

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Noriyuki Morimoto's Blog

What’s Wrong with Japanglish?

Aug 14, 2017
byNoriyuki Morimoto

Globalization stands for the uniform rule of reason, as well as coexistence of diverse values: different values that respect, stimulate, incorporate, and affect each other to create new things. It stands for the progress of humanity, innovation in the global civil society, and socioeconomic growth. Global rule of reason and diversity, the rich culture created from diversity, the ideal global civilization... in such diversity, Japanese qualities shine, as the food cultures of China and India inspired the creation of ramen and curry rice in Japan, as ukiyo-e prints had a strong impact on French impressionism, and as Imari ware influenced Meissen porcelain. Japan can actively contribute to the progress of global culture by offering everything Japanese to the Global space of cultural creation: things that are uniquely Japanese, things that were born in the cultural tradition of Japan, things of Japanese origin, things rooted in the historical experience of Japan, Japanese characteristics, and individual strengths of each Japanese person. A strong focus on Japan is not to close oneself within Japan’s borders. To globalize means that all kinds of non-Japanese features are fused with everything Japanese to trigger a chemical reaction, or rather an explosion. In that sense, ramen is amazing. It is not global to think of promoting authentic Japanese cuisine overseas. Global means to apply the methods of Japanese cuisine to all kinds of food ingredients in the world, and to use uniquely Japanese food ingredients in all kinds of cooking techniques in the world. In that sense, learning the formal English language is far from being global. Native English speakers who speak authentic English may wish for the language to maintain its authenticity as it is used as a global language, and non-natives tend to hope to learn authentic English. But as English becomes a global language, it has to transform itself from the original form by obtaining new expressions and words from various other languages. People always talk about English education when they talk about globalization in Japan. But as the purpose is English communication as a way of social interaction, and not the acquisition of the authentic English language, the issue should be how to create opportunities to use English, not how to teach the language itself. However awkward the language may be, what matters is whether it can be understood. Spreading the acceptance of English with Japanese features has more value than learning authentic English. So what is wrong with Japanglish?

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Recent News

Today's Pick

Aug 09, 2017
byAkane Hashimoto

Japan's drive to reform corporate governance at crucial point"Yes, governance reform is a big key for growth." 

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Recent News

Today's Pick

Aug 02, 2017
byAkane Hashimoto

MUFG to spend up to US$9b on acquisitions to double assets under management"They should have to find various focused teams in order to compete on the acvtive space." Japan chooses 9 members for newly created GPIF board"Positive step."

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Noriyuki Morimoto's Blog

An Innovative Way to Introduce ERISA in Japan

Jul 31, 2017
byNoriyuki Morimoto

Nobuchika Mori, Commissioner of the Japanese Financial Services Agency (FSA), gave a lecture on April 7th in which he implied that fiduciary duty applies to corporate pension funds. However, corporate pensions are under the jurisdiction of the Ministry of Health, Labor and Welfare, not the FSA. So how is the FSA going to drive a corporate pension reform? Preceding Mr. Mori’s lecture, on March 30, the FSA announced a soft law titled “principle for client-oriented business operation”. The term fiduciary duty is no longer used in the title, but before official disclosure, the preliminary title had been “client-oriented business operation (fiduciary duty)”, treating the two concepts as equal. This principle is a soft law, not a regulation imposed by the FSA. Moreover, in the process of devising this principle, despite criticism that the scope was not clear by stating that it covers “a broad range of financial businesses engaged in asset management related activities”, the FSA pushed through its position that the scope should not be strictly identified. Therefore, if a firm conducts activities related to asset management, it would classify as a financial business under this principle even if it is beyond the jurisdiction of the FSA. Then there is no room to deny that corporate pension funds are also financial businesses that fall under the scope of this principle. It is free for the companies and pension funds that support the position of the principle to actively comply with it. Conversely, entities that do not support the principle are free not to comply; if they do not think the principle applies to them in the first place, there is no need for them to explain the reason for non-compliance either. However, if even one corporate pension fund starts complying with this principle, subscribers and recipients of non-compliant pension funds should wonder why theirs do not. Such subscribers and recipients can then request explanation for non-compliance.  When that happens, there is no way the employer can explain that the company selects management firms by friendly relationships with certain financial institutions based on bank loans and shareholding, or that the person responsible for the corporate pension is selected in a way to secure positions for employees and officials who have reached retirement age. As failure to change an unexplainable situation would only prove their unacceptably low level of corporate governance, efforts should surely be taken to correct the situation. Mr. Mori regards such dynamics as a market principle driven by clarification, and uses it as a measure to address administrative issues. Companies that proactively comply with this principle are without doubt excellent companies. If one company expresses compliance and thus “clarifies” its excellence, other companies would be pressured to clarify their position as well, and such a race to excellence would drive the reform forward. This is the method of execution taken by Mr. Mori.

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Recent News

Today's Pick

Jul 26, 2017
byAkane Hashimoto

Japan Regulator Warns Small Banks They Must Change to Survive"After years of warning, our regulators probably wouldn't rescue those who might get in trouble." Japan's finance czar gets a rare 3rd term -- and 3 challenges"2017 will be a very important year for Japanese asset management industry." Most Japan firms reluctant to boost shareholder returns further: Reuters poll"Interesting to see how the monetary policy makers will react in case no further improvements of  balance sheet structure is seen." Japan’s regulator steps up disclosure duties for life insurers"This is big thing. Insurance companies will no more be able to aggressively sell their services to the companies they own."

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Recent News

Today's Pick

Jul 19, 2017
byAkane Hashimoto

Bloggers Are Japan Regulator's New Weapon in Fund Fight"Goal is to create an investment culture amongst "younger" generations. " 

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Noriyuki Morimoto's Blog

The Shock of Japanese ERISA

Jul 18, 2017
byNoriyuki Morimoto

On April 7th, Nobuchika Mori, Commissioner of the Japanese Financial Services Agency (FSA), gave a lecture in which he referred to the poor state of asset management for Japanese corporate pension plans. He first pointed out the reality that firms that manage corporate pension funds are largely selected according to friendly relationships between the company and financial institutions. His second point was that the personnel overseeing the pension fund is primarily decided according to the company’s personnel relocation policies, resulting in the assignment of people who lack any professional insight. Mr. Mori said that this situation surrounding corporate pensions is problematic from the viewpoint of fiduciary duty. He is making it clear that companies and pension funds have fiduciary duty in their relations with subscribers and recipients who are the end beneficiaries. In other words, by referring to the selection of management firms, Mr. Mori is saying that managers of corporate pension funds have strict duty of loyalty to pursue the benefit of their subscribers and recipients without taking the benefit of the employer into account. His comment on selection of personnel overseeing pension funds is about strict duty of care to ensure best asset management practices for the beneficiaries. Preceding Mr. Mori’s lecture, on March 30, the FSA announced a soft law titled “principle for client-oriented business operation” to drive the reform of asset management-related businesses. The term fiduciary duty is no longer used in the title, but before official disclosure, the preliminary title had been “client-oriented business operation (fiduciary duty)”, treating the two concepts as equal. Then, does Mr. Mori’s comment imply the FSA’s view that the “principle for client-oriented business operation” also applies to corporate pension funds? By replacing “clients” with “subscribers and recipients of corporate pensions”, is the principle directly applicable to corporate pensions? If that is the case, a major reform is bound to happen in Japan in the same way as when ERISA was introduced in the United States. It should have a huge impact on Japanese corporate management, and should be a chance for Japan’s asset management industry to take a great leap forward.

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Recent News

Today's Pick

Jul 12, 2017
byAkane Hashimoto

Japan Has Entered The Next Phase: Unlimited Money Printing"Therefore, series of FSA efforts targeting regional banks in particular." MUFG Repackages Real Estate Loans as Japan Property Credit Soars"Origination of new assets and securities would help Japan grow further. " Japan's MUFG to leverage Morgan Stanley expertise in wealth management foray"…and MUFG seems to be  targeting to grow the overseas operations to 50% in the next five years." 

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Recent News

Today's Pick

Jul 05, 2017
byInvestment in Japan

Japan reappoints Mori as top financial services regulator"Known for his sharp criticism of the financial services industry, his re-appointment was widely expected" Government Pension Investment Fund begins investment using socially responsible stock indexes"Huge amount of the ¥1 trillion investment amounts to about 3 percent of the ¥30 trillion allocated to domestic stocks in the GPIF’s portfolio." BOJ Could Cut ETF Buying if Inflation Nears 2 Percent-Harada"Could it happen...?"

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Noriyuki Morimoto's Blog

The Poor State of Japan’s Corporate Pensions Exposed by FSA

Jul 03, 2017
byNoriyuki Morimoto

Nobuchika Mori, Commissioner of the Japanese Financial Services Agency (FSA), gave a lecture on April 7th in which he lashed out at the current state of the asset management industry and demanded for a reform. In the lecture, he also referred to the management of Japanese corporate pension funds. According to the official record of the lecture disclosed by the FSA, he commented as follows: “In addition to asset management firms, the role of asset owner is also important. For instance, pension funds are required to fulfill fiduciary duty to benefit the citizens paying into the pension system. The asset owner has to determine which management firm has the capabilities to which it is best to entrust their assets, but if corporate pension funds give the mandate for management based on relations with certain asset management groups, that is problematic from the viewpoint of fiduciary duty. US university funds and pension funds that are high-quality asset owners and deliver great mid-to-long term results always have responsible personnel with a sharp eye for excellence and high skills of management. Also for corporate pension funds in Japan, it is desirable that such personnel is selected and appointed from a wide range of candidates in and outside of the company, based on expert skills and decision-making capabilities rather than relocation of personnel within the company. Both the asset owner and asset manager should heighten their fundamental capabilities and fulfill fiduciary duty for the citizens who are the ultimate beneficiaries: I believe that would lead to growth of the asset management industry in Japan.” Mr. Mori has, in effect, exposed the poor state of Japanese pension funds. Although he presents a hypothesis in saying ” if corporate pension funds give the mandate for management based on relations with certain asset management groups”, it is natural to interpret it as a euphemism for the recognition that corporate pension funds are indeed giving management mandates based on their relations with asset management groups. By saying “for corporate pension funds in Japan, it is desirable that such personnel is selected and appointed from a wide range of candidates in and outside of the company, based on expert skills and decision-making capabilities rather than the regular circulation of personnel within the company”, Mr. Mori is not simply expressing a wish but is rather pointing out the inappropriate way asset owners select their personnel for corporate pensions funds. By the way, in Japan, corporate pensions are under the jurisdiction of the Ministry of Health, Labor and Welfare. What is the intention of the FSA Commissioner to deliver this statement? Assuming that it is not overstepping of authority, is it indicative of a change in the regulatory framework?

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Interview

Interview 032_Gregory Rokuro Hara

Jul 03, 2017
byInvestment in Japan

Gregory Rokuro Hara: CEO & Managing Partner, Head of Investment Committee Since joining J-STAR as a founding member in 2006, Gregory Hara has been involved in origination, execution, monitoring, and exiting. He is also involved in corporate activities, fund raising, and PR. Prior to joining J-STAR, Mr. Hara worked at JAFCO, where he organized buyout investments for companies within the service industry, such as BancTec Japan and Medical Tribune. He also has experience in buyout investments, investment banking at Lehman Brothers (Tokyo) and corporate financing in Japan and America in the form of purchasing, LBO, project financing and cross border leasing at Long-Term Credit Bank of Japan. Mr. Hara received a bachelor's degree from Keio University. He is a Certified Public Accountant (US CPA) and a Chartered Member of the Securities Analysts Association of Japan (CMA)

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