The Supreme Court on July 11 sentenced to death a man who killed five and injured 10 at JR Shimonoseki Station in 1999, saying there could be no room for leniency toward the defendant because his act was extremely malignant in that he indiscriminately assaulted passersby with whom no fault was found.

To protect and ensure the peace of people's lives, it is necessary to be firm against crimes. Doing so also would offer some solace to victims' families.

There were 649 murder cases in the first half of this year, a 10 percent increase from the same period last year. The number of murder cases had been on the decrease for four consecutive years, making the latest figure a concern.

While revival and investment funds are eager to cheaply acquire regional banks with strong customer bases, the FSA sees them more as being "white knights" to rescue struggling lenders. Financial industry watchers wonder whether the funds and the FSA can find common ground.

At a New Year party held by the Second Association of Regional Banks in January 2007, then Financial Services Minister Yuji Yamamoto surprised participants by urging them to manage their banks "with a sense of tension," saying, "I just talked with Mr. (Charles) Prince of Citigroup. He said he wanted to buy a Japanese bank."

Charles Prince, then chairman and CEO of Citigroup Inc., was in Japan at that time and asked Yamamoto about the U.S. financial giant's possible acquisition of the financial group led by Resona Holdings Inc. (8308).

FSA officials expected the consolidation of regional banks to accelerate, with the Resona group accepting troubled lenders. But Citigroup incurred huge losses following the collapse of the speculative bubble in the U.S. housing market, and Prince resigned to take the blame. The plan to acquire the Resona group faded away.

Burmese Junta Signs Asean Charter

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The Burmese junta signed the new Asean Charter on Monday, which includes a regional human rights body.

Meanwhile, a joint Asean-UN press release issued on Monday said the Burmese relief and reconstruction effort will need US $1 billion over the next three years.

Burma’s participation in the charter ratification held during the Asean foreign ministers meeting in Singapore, "Demonstrates our strong commitment to embrace the common values and aspiration of the people of Asean to build… a sharing and caring community,” Burma’s foreign minister Nyan Win said at a signing ceremony.

Burma's Foreign Minister Nyan Win, center, takes his seat prior to the start of the plenary session of the 41th Asean Ministerial meeting in Singapore on July 21. Burma has ratified a proposed international charter that includes controversial human rights provisions, officials said Monday, a day after regional powers slammed the nation's ruling junta for extending opposition leader Aung San Suu Kyi's detention. (Photo: AP)

A spokesperson for Burma’s main opposition National League for Democracy (NLD), Han Thar Myint, told The Irrawaddy on Monday that actions are more important than the signing of the charter.

“Accepting the charter seems to be a way for the ruling junta to rebuild its credibility,” said Han Thar Myint. “Burma had signed the Universal Declaration of Human Rights in the past, but we all have witnessed what is going on in the country.”

＜モカ＞消えるかも　輸入ストップ、在庫わずか

7月20日2時31分配信 毎日新聞

輸入が滞り、喫茶店での在庫切れが心配されるモカの豆 　すっきりした酸味で国内でも人気の高いコーヒー豆「モカ」の販売を休止するコーヒー業者が相次いでいる。輸入の９８％以上を頼っているエチオピア産から基準値以上の残留農薬が検出され、厚生労働省が事実上、輸入にストップをかけている。再開のめどはたっておらず、喫茶店やスーパーの店頭などからモカが今後、姿を消す可能性もある。また、「ブレンドコーヒーの味が変わってしまう」と困惑する声も上がっている。

TOKYO (Nikkei)--Japanese corporations are earning record profits from direct investment in their overseas operations, according to balance-of-payment data compiled by the Bank of Japan and the Ministry of Finance.

Dividends and interest paid by foreign units as well as their internal reserves grew 32.9% to a record 5.55 trillion yen in fiscal 2007, more than triple the fiscal 2002 figure. This is also nearly 10% of the 57 trillion in pretax profit the MOF estimates to have been earned by Japanese companies in fiscal 2007.

TOKYO (Nikkei)--Hedge fund investment in Japan is on the decline, with their assets in that nation falling to about 22 billion dollars, or 2.3 trillion yen, as of June 30, a drop of about 10% from the end of 2007, according to data from market researcher Eurekahedge Pte.

Positives of cross ownership:

• Closely ties each business to the economic destiny of its business partners
• Promotes a slow rate of economic change

Cross ownership of shares is criticized for:

• Stagnating the economy
• Wasting capital that could be used to improve productivity
• Expanding economic downturns by preventing reallocation of capital

A major factor in perpetuating cross ownership of shares is a high capital gains tax rate. A company has less incentive to sell cross owned shares if taxes are high because of the immediate reduction in the value of the assets.

For example, a company owns $1000 of stock in another company that was originally purchased for $200. If the capital gains tax rate is 50% (like Germany) and the company sells the stock, the company has $600 which is 40 percent less than before it sold the stock.

Long term cross ownership of shares combined with a high capital tax rate greatly increases periods of asset deflation both in time and in severity.

After roughly doubling in value from 2000 to 2005, home prices have fallen about 17 percent — and more like 25 percent in inflation-adjusted terms — according to the widely watched Case-Shiller index.

Even so, most economists think house prices must fall an additional 10 to 15 percent to get back to reality. One useful measure is the relationship between the costs of buying and renting a home. From 1985 to 2002, the average American home sold for about 14 times the annual rent for a similar home, according to Moody’s Economy.com. By early 2006, home prices ballooned to 25 times rental prices. Since then, the ratio has dipped back to about 20 — still far above the historical norm.

With mortgages now hard to obtain and speculation no longer attractive, arithmetic has replaced momentum as the guiding force for housing prices. The fundamental equation points down: Even as construction grinds down, there are still many more houses on the market than there are people to buy them, and more on the way as more homeowners slip into foreclosure.

By the reckoning of Economy.com, enough houses are on the market to satisfy demand for the next two-and-a-half years without building a single new one.

...

When will banks revive?

So far, they have written off more than $300 billion in loans. Many experts now predict the toll will rise to $1 trillion or more — a staggering sum that could cripple many institutions for years.

Back when home prices were multiplying, banks poured oceans of borrowed money into real estate loans. Unlike the dot-com companies at the heart of the last speculative investment bubble, the new gold rush was centered on something that seemed unimpeachably solid — the American home.

But the whole thing worked only as long as housing prices rose. Falling prices landed like a bomb. Homeowners fell behind on their loans and could not qualify for new ones: There was no value left in their house to borrow against. As millions of people defaulted, the banks confronted enormous losses in a bloody period of reckoning.

In March, the Federal Reserve helped engineer a deal for JPMorgan Chase to buy troubled investment bank Bear Stearns. Many assumed the worst was over. But, this month, the open distress of Fannie Mae and Freddie Mac — two huge, government sponsored institutions that together own or guarantee nearly half of the nation’s $12 trillion in outstanding mortgages — sent a signal that more ugly surprises may lie in wait.

To calm markets, the government last weekend hurriedly put together a rescue package for Fannie and Freddie that, if used, could cost as much as $300 billion. The urgent need for a rescue — together with another round of billion-dollar write-offs on Wall Street — has unnerved economists and investors.

...

Through the years of the housing boom, many Americans came to treat their homes like automated teller machines that never required a deposit. They harvested cash through sales, second mortgages and home equity lines of credit — an artery of finance that reached $840 billion a year from 2004 to 2006, according to work by the economists James Kennedy and Alan Greenspan, the former Federal Reserve chairman. That allowed Americans to live far in excess of what they brought home from work.

But by the first three months of this year, that flow had constricted to an annual rate of about $200 billion.

Average household debt has swelled to 120 percent of annual income, up from 60 percent in 1984, according to the Federal Reserve.

And now the banks are turning off the credit taps.

By Stuart Biggs

July 19 (Bloomberg) -- A magnitude-7.0 earthquake struck off Japan's eastern coast, the U.S. Geological Survey said on its Web site. There were no reports of injuries or damage, public broadcaster NHK said.

``All things considered, it was a decent quarter,'' Goldman Sachs analyst William Tanona, who has a ``sell'' rating on the shares, wrote in a note today. ``The consumer businesses continued to show deterioration in credit statistics, as expected. However, results were not as bad as investors had expected.''

Writedowns for subprime-related assets, leveraged loans and bond insurance contracts totaled $7.2 billion, down from about $12 billion in the first quarter and $18 billion in the fourth quarter of 2007. The bank's costs for loan write-offs and higher credit reserves increased $4.5 billion from the second quarter of last year, mainly because of rising delinquencies in North America and the company's credit-card business.

Writedown Estimate

Credit Suisse Group analyst Susan Roth Katzke predicted in a June 24 note that the company would have as much as $10 billion of writedowns.

TOKYO (Nikkei)--Credit Suisse plans to start offering financial services for the moneyed classes in Japan, rolling out by the end of the year private banking services for those who own 1 billion yen or more in financial assets.

As earnings from investment banking operations have dropped in the wake of the U.S. subprime mortgage problem, foreign financial institutions are putting more efforts into private banking operations, which deliver stable commission revenues. They face intensifying competition with Japanese rivals, which are also foraying into this growing field.

Credit Suisse's private banking services will target the nation's billionaires and offer not only stocks, bonds, real estate and other investment products, but will also dispense advice on business succession and handing down family assets.

According to Nomura Research Institute Ltd. (4307), 865,000 households own 100 million yen or more in financial assets in Japan. The number comes to 52,000 for those with financial assets worth at least 500 million yen.

The private banking business is a key part of the Swiss firm's global operations, serving roughly 2.5 million customers and managing assets totaling around 100 trillion yen worldwide.

In Japan, it will provide private banking services via its Tokyo branch and Credit Suisse Securities (Japan) Ltd. as soon as registrations with the Financial Services Agency are completed. In the future, it will consider offering the services in locations outside Tokyo.

Hongkong and Shanghai Banking Corp. helped pioneer private banking services in Japan, entering into the business in 1996. Now targeting people with 300 million yen or more in financial assets, the firm hopes to be managing 1 trillion yen or so in assets for its private banking customers by the end of 2010.

UBS AG offers private banking services to those worth at least 200 million yen in Tokyo as well as in Osaka and Nagoya.

Among Japanese megabanks, Mizuho Financial Group Inc. (8411) provides private banking services through subsidiary Mizuho Private Wealth Management Co. Mitsubishi UFJ Financial Group Inc. (8306) serves customers with 100 million yen or more financial assets via Mitsubishi UFJ Merrill Lynch PB Securities Co., a joint venture with Merrill Lynch & Co. (8675) of the U.S.

In addition, Nomura Holdings Inc. (8604) and Daiwa Securities Group Inc. (8601) offer services and products for wealthy people through their brokerage units.

(The Nikkei Friday morning edition)

木村拓哉さん（ＣＨＡＮＧＥ）

皆さんと近いものに・・・・・

　「全く興味がないというより、流れてくる情報があまり心地よくなかったので、ちょっと自分から目線を外しがちだった」

　これまで政治に対して感じてきたイメージを淡々と語る。今回演じる啓太も最初はそんな姿勢だった。

　ただ、啓太は敬遠していた政治の世界に飛び込み、総理大臣にまで上りつめる。“永田町の論理”が支配する政界で、普通の人の視点で政治に取り組む。「知識も経験もないから、政治のベテランたちとは温度や視点が全く違う。でも、抱く思いや疑問は皆さんと近い」と話す。

　「変化」を意味するタイトルの今回のドラマが、視聴者と作り手とをつなぐ、「キャッチボールのボールになれたら」と思う。

　「テレビの前にいる人たちと、テレビとの関係性が希薄になっていると感じているんです。それをもう一度、近いものに変えていきたい」

　熱気に満ちた視線とともに紡がれる力強い言葉。視聴者の中で、本当に何かが変わるような気さえしてくるから不思議だ。

文・川村律文

Ｑ　いつもやる験担ぎはありますか？（茨城県・今シーズンは中島Ｊｒ．だ！さん）

Ａ　験担ぎではないですが、クセで靴は右からはきます。

Ｑ　子どものころは、どんな男の子でしたか？（東京都・母さん）

Ａ　よく外で遊んでました。一通りの遊びはしましたね。

Ｑ　ストレス解消法は？（埼玉県・Ｎ子さん）

Ａ　あまりたまらないので、現場で解消しています。でも一番は海です。サーフィンしているときは最高ですね。

Ｑ　演じてみたい役はありますか？（千葉県・舞美さん）

Ａ　ちゃんと理解していないとできない役もあるので、色々なものに興味を持ちたいと思います。

ＣＨＡＮＧＥ（１２日からフジテレビ系　月曜後９．００)

　長野の小学校教師である啓太（木村拓哉）は、父と兄の急死で、急きょ衆議院選に出ることになった。秘書の理香（深津絵里）や、選挙プランナー・韮沢（阿部寛）らに助けられながら奮闘する。

TOKYO (Nikkei)--Something unusual happened last month. Shareholders of Aderans Holdings Co. (8170) rejected the reappointment of seven directors to its board, leaving the wig and hairpiece maker with only two endorsed board members, falling short of the three required by the corporate law.

The vacancy was created because leading stockholder Steel Partners, which spearheaded the opposition, did not submit a shareholder proposal for its selection of new board members.

Such a situation -- a shortfall in the number of directors -- could never happen in the U.S., even though shareholders there are generally believed to enjoy strong rights.

Related Stories: • SINGULAR VIEW: Japan Firms Still Attractive For Investment Funds • Invest Funds Adopt Pragmatic Approaches To Shareholders Mtgs

In the U.S., the appointment of board directors does not require a majority vote by shareholders. Stockholders can submit their candidate proposals, but firms are not required to include those recommendations on the shareholder meeting agendas sent to investors, making it difficult for shareholder proposals to be widely known.

Under the former commercial code, which was replaced by the corporate law in 2006, companies had to obtain shareholder approval for a range of things. That prompted firms to effectively restrict shareholder rights by allocating a significant portion of their stock to be held by friendly parties under cross-holding arrangements.

The decline in the cross-holding practice and the arrival of the new law made Japan a rare country where shareholders are given the right to govern the company, both in name and in deed.

However, it is not a universal truth that shareholders are the owners of the company. It would be more accurate to say that "shareholders are the owners of the capital of the company, not the company itself," in the words of Yasuzaemon Matsunaga, an electric power tycoon of the early 20th century.

The history of stock companies dates back to the East India Companies founded more than 400 years ago. The British East India Company had shareholders meetings from the start, while the Dutch East India Company did not have such gatherings.

The stockholders of the Dutch firm had the right to receive dividends but no opportunities to exercise their voting rights. So the company did not care who its shareholders were, and anonymous stockholders were acceptable.

Today, however, it does matter who shareholders are when they are granted the right to choose the members of the board of directors and can exercise this right. In the U.K., companies have the right to know who their shareholders are as well as the obligation to find out who they really are -- not only who they appear to be on a registered list.

With the rise of fund capitalism in recent years, privately offered investment funds ought to be required to disclose their investors when they exercise voting rights, though it would not be realistic to demand the same of pension funds or publicly offered funds.

A shareholders meeting is a place where the company's management is required to squarely face stockholders, and stockholders are also duty-bound to do the same. It is true that many corporate managers still lack a sense of tension -- probably due to the aftereffects of the cross-holding era -- but a company does not exist for the sake of shareholders. If they are to take part in governing the company, shareholders have obligations as well as rights.

Is it democracy for funds whose real nature is hidden in anonymity to be granted the right to decide on important affairs at a stock company? Corporate managers who wish to enhance their readiness for hostile takeover attempts should start with requesting funds to disclose their investors and making such disclosure obligatory.

If funds argue that disclosing such data would scare their investors and lead to a decline in the stock price, Japanese firms could simply answer that such an outcome would be OK with this country.

-- Translated from an article written by special senior Nikkei staff writer Atsushi Suemura

(The Nikkei Tuesday morning edition)

TOKYO (Nikkei)--Japan Post Bank, an arm of Japan Post Group, will step up its investment overseas by tapping foreign companies to manage a portion of the roughly 180 trillion yen in assets it oversees. Major U.S. asset management firm BlackRock Inc. is believed to be among the candidates.

The bank is expected to invest in U.S. and European corporate bonds, including securitized products -- a departure from its practice of allocating nearly 90% of its assets to government and other domestic bonds. Even though Japan Post would not divulge the size of such overseas investment, it is expected to put at least 1 trillion yen in foreign instruments in fiscal 2008 alone.

At a time when its balance of savings deposits continues to decline, the bank aims to boost earnings to better prepare for its fiscal 2010 initial public offering.

Japan Post Bank was created through the postal privatization process that began last October. Given that the government still holds a 100% stake in the bank, some are calling for caution about the bank's move into overseas investment.

Uncertainty is lingering over the financial markets overseas following the subprime mortgage crisis in the U.S. But Japan Post Bank believes that many corporate bonds are undervalued. While it will invest in highly rated bonds on its own, it will call on foreign firms to manage riskier bonds on its behalf.

(The Nikkei Tuesday morning edition)

TOKYO (Nikkei)--The implementation of three finance-related laws, including the Financial Instruments and Exchange Law, hurt major Japanese banks' investment trust sales and other commission-based businesses in the fiscal year ended March 31, throwing a monkey wrench into their retail banking operations.

Mitsubishi Fuso markets improved model of double-decker bus for expressways

SINGAPORE (Nikkei)--Effectively demonstrating Japan's waning presence in Southeast Asia, the country's direct investment in Singapore's manufacturing sector fell for the second straight year in 2007 to roughly 1 billion Singapore dollars, or some 76 billion yen, according to a report published in late January by the Singapore government.

In contrast, the report shows that U.S. and European investment in the city-state's manufacturers has been expanding steadily in recent years. Novartis AG and ExxonMobil Corp. are among the many Western firms cited for making new investments in the sector last year, but only two Japanese companies -- Sony Corp. (6758) and Mitsui & Co. (8031) -- are mentioned in the report.

The same trend is seen in Vietnam, the country posting the highest growth rate in the region and one which many Japanese firms view with a great deal of interest. The Southeast Asian nation attracted 20.3 billion dollars in direct foreign investment last year, up roughly 69%, but Japan trailed South Korea, Singapore, Taiwan and Malaysia in the amount invested there.

Last year, Japan ranked first in the number of applications made to start investment projects in Thailand, where many Japanese auto and home electronics manufacturers operate, but finished second to Europe in terms of project value.

In a speech delivered in February, Singapore Minister Mentor Lee Kuan Yew predicted that Southeast Asian countries will not slip into recession even in the face of the U.S. economic slowdown, explaining that the economies of China and India will drive the growth of Asia as a whole. He never even mentioned Japan, the world's second-largest economy, which used to be the engine of growth in the region.

TOKYO (Nikkei)--If the rates on the gasoline and other road-related taxes are lowered from April, Japan's economic growth may suffer, but the impact would be limited if lower rates are in place for only a few months, according to an estimate by Nikkei Digital Media Inc.

However, reduced taxes for a full year could cause economic growth to decline by up to 0.3 percentage point due to a cutback in road construction.

TOKYO (Nikkei)--Shareholders in the former Nikko Cordial Corp. received stock in Citigroup Inc. (8710) when the U.S. financial services giant took over the Japanese brokerage through its local unit, but those who owned less than the round lot are facing problems.

Citigroup will pay dividends to its shareholders from Friday through early April. But according to Mitsubishi UFJ Trust and Banking Corp., which is the transfer agent, only about half of the Nikko Cordial shareholders that became Citigroup shareholders have foreign-stock trading accounts at brokerages. Investors holding such accounts can receive Citigroup payouts in yen and buy and sell Citigroup shares on the Tokyo Stock Exchange.

But the remaining investors do not actually own Citigroup stock listed on the TSE. Their names are on a record of shareholders in the U.S., where the firm is based. Many of these investors held less than the round lot in Nikko Cordial shares.

In Japan, those holding less than the basic unit of trading can receive dividends but have no voting rights. The round lot for Nikko Cordial was 500 shares, so the names of those owning less than 500 shares were automatically transferred to the U.S.

To address the needs of these shareholders, Mitsubishi UFJ Trust started this month a service it says is probably the first of its kind. It began offering translations of the English earnings-related documents that are sent to these investors, in addition to paying dividends in yen instead of dollars.

On the Democratic side, it’s somewhat disappointing that Barack Obama, whose campaign has understandably made a point of contrasting his early opposition to the Iraq war with Hillary Clinton’s initial support, has tried to score a twofer by suggesting that the war, in addition to all its other costs, is responsible for our economic troubles.

The war is indeed a grotesque waste of resources, which will place huge long-run burdens on the American public. But it’s just wrong to blame the war for our current economic mess: in the short run, wartime spending actually stimulates the economy. Remember, the lowest unemployment rate America has experienced over the last half-century came at the height of the Vietnam War.

Osaka researchers misused public funds

The Yomiuri Shimbun

OSAKA--Researchers at a public research and inspection institute in Tennoji Ward, Osaka, misappropriated 2.74 million yen in official development assistance for covering the expenses of a project involving overseas trainee engineers, The Yomiuri Shimbun has learned.

The Osaka City Institute of Public Health and Environment Sciences purchased goods not related to the project using the expense fund.

The institute was also found to have given only strict verbal warnings to the 19 researchers involved in the misappropriation after it was discovered in September 2004 during an in-house investigation. The institute did not ask the researchers to return the misappropriated money.

A firm operated by a former researcher at the institute issued falsified bills to help the institute misappropriate the money from the fund.

The Japan International Cooperation Agency in Tokyo, which indirectly commissioned the institution to carry out the training project, said it would consider action against the institute after receiving a report from it. The agency will consider asking the institute to return the money if the irregularities are confirmed.

Each year, JICA commissions a 7 million yen training project for foreign engineers to study air pollution measures at the Global Environment Center Foundation, an affiliate of the Osaka municipal government based in Tsurumi Ward.

As part of the project, the research institute conducts several programs, including a training program for analyzing exhaust gases.

The institute purchased 30 items worth 2.74 million yen over four years from fiscal 2000 to fiscal 2003 by falsely claiming the equipment was necessary for project-related research, such as reagents and flasks, claiming expenses from the fund.

===

3 mil. yen gratuities not returned

Twenty-four researchers of the Osaka City Institute were also found to have received a total of 3 million yen in gratuities in return for giving lectures to foreign engineer trainees as part of projects using ODA funds, it was learned Sunday.

The Osaka municipal government bans its workers from accepting gratuities for work conducted as part of their official duties, saying they should not get money for work covered by their regular salary.

The institute gave strict verbal warnings to the researchers concerned, but did not order them to return the gratuities when the cases came to light during an in-house investigation in September 2004.

TOKYO (Nikkei)--Corporate pension plans are expected to incur a negative investment return in fiscal 2007 for the first time in five years due largely to falling stock prices and the yen's appreciation in the wake of the U.S. subprime loan crisis.

"We feel scared because we don't know when the drop in investment yields will come to a halt," said an official at the pension fund of Matsushita Electric Industrial Co. (6752). With 1.2 trillion yen under management, it is one of the largest corporate pension funds in Japan.

The yield on investment by the Matsushita fund came to a negative 6% in the first 10 months of fiscal 2007, and its performance is showing no signs of improving amid the continuation of the strong yen and weak stocks.

Related Stories: • Labor Minister Backs Putting Pension Assets In Investment Funds • Public Pension Fund Seen Reporting Investment Losses For FY07 • MARKET SCRAMBLE: Pension Funds Look Beyond Japan Amid Slump

Pension fund managers at the consumer electronics giant, best known for its Panasonic brand, initially expected returns of around 4% for the current fiscal year, based on the assumption that economic activity would be solid worldwide. But the fund has seen its investment performance deteriorate in the face of global financial unrest triggered by the subprime turmoil. The investment yield plunged into negative territory at the end of last year, falling short of the target by 120 billion yen as of January.

Pension programs of other companies are in a similar state. The fund at Sumitomo Electric Industries Ltd. (5802) had a negative yield of about 5% in the 10 months through January, while the Oji Paper Co. (3861) fund is likely to book a negative return of more than 5% for fiscal 2007.

According to Rating and Investment Information Inc., some 130 corporate pension programs suffered negative returns averaging 6.39% in the April-January period.

The dismal performance is a direct result of stock price falls worldwide and the yen's appreciation. The Nikkei Stock Average has plunged 24% since last April, while the MSCI World Index, which tracks global stock trends, has dropped 5%. Long-term interest rates are showing downward trends in Japan and elsewhere.

Corporate pension funds have invested primarily in domestic stocks and bonds, and the recent market environment makes it difficult for them to earn stable returns.

The pension fund of Secom Co. (9735) has thus responded to the situation by cutting the ratio of Japanese stocks to total assets under management and pouring more money into stocks and bonds issued in China and other emerging economies. "Japanese stocks are risky as they tend to be affected by foreign exchange rates," said Hirokazu Yagi, managing director of the Secom pension fund. "High growth can be expected in stocks and bonds of emerging economies in the long run, though they may fluctuate in the near term."

The Secom fund has secured positive investment yields through schemes such as flexibly changing the exchange hedge ratio to cope with the yen's appreciation against the dollar.

The pension fund for KDDI Corp. (9433) workers will lower the ratio of investment in Japanese stocks to 12.5% in April from the current 29% and raise that of alternative investments to 16% from around 12%. It will also consider investing in unlisted stocks and privately placed real estate investment funds as well as asset-backed securities whose values have plunged as a result of the subprime mess.

Investment in undervalued financial products could turn out to be a smart move because "profits can be expected when their prices return to normal levels," a KDDI fund official said. But alternative investments do not necessarily ensure high returns, with Lion Corp. (4912) and many other funds saying that their experience with real estate investment trusts has proved disappointing.

The selection of asset management companies and investment products is extremely important. According to a survey conducted by The Nikkei, only 40% of pension funds at major Japanese companies have full-time employees responsible for asset management. Experts on financial affairs and professional fund managers are a minority of staff running corporate pension funds, while many funds are run by retired officials who used to be in charge of personnel and labor affairs at their companies.

Many corporate pension funds have yet to understand that they cannot fulfill their fiduciary duties as long as they totally rely on asset management companies, especially in light of growing uncertainties such as a possible recession in the U.S.

"There will be a greater gap between funds over the selection of investment products," said Konosuke Kita, executive consultant at Russell Investment

(The Nikkei Friday morning edition)

Pachinko parlor pinch puts pressure on industry

Men play pachinko. (Mainichi)

Pachinko and pachinko slot machines, once known as the kings of entertainment for the general public in Japan, have started to show signs of decline amid tightened regulations on gambling. While the overall number of pachinko addicts may have declined as a result, figures show other unexpected problems have started to emerge.

A white paper on leisure complied by the Japan Productivity Center for Socioeconomic Development showed that in 2006, Japan's pachinko-playing population stood at 16.6 million people, a drop of 11 million people compared to 10 years earlier.

Profits have also fallen. In 1995, the gross turnover for the pachinko industry reached 31 trillion yen, but in 2006 the figure shrank to 27 trillion yen.

This has hit many pachinko parlors hard, with 144 pachinko parlor operators going bust in 2007, 40 percent more than during the previous year. It was the worst figure for bankruptcies in the past decade.

Nobuo Tomoda, head of the information management department at credit research firm Tokyo Shoko Research, suggests pachinko parlors' focus on gambling is behind the bankruptcies.

"It's probably because the gambling factor is too high, and pachinko parlors no longer remain places for regular salarymen to enjoy light entertainment," he said.

Since the 1980s, pachinko parlors have increasingly brought in machines focused on gambling.

"When the payout in each case was bigger, pachinko fanatics who dreamed of a jackpot would feed large amounts of money into the machines, which boosted sales," explains an executive from a pachinko parlor operator.

In the early 2000s, a pachinko slot machine titled "Million God," which was said to offer wins as big as 1 million yen per day, was developed, and customers flocked to parlors that had the machine.

However, side effects have emerged alongside the big jackpots. Firstly, novices have become more self-conscious about visiting pachinko stores, thereby reducing the overall population of pachinko players. But the serious problem of pachinko addictions and players with large debts remains. Across Japan, there has been a spate of problems caused by pachinko addictions, including cases in which pachinko-playing parents left their babies in cars in summer while they played pachinko, causing the infants to die from heat exhaustion.

The problems associated with pachinko prompted the National Police Agency to tighten regulations and by September 2007, most of the pachinko machines that focused largely on gambling were cleared out. The Financial Services Agency also introduced restrictions, banning the placement of unmanned loan-dispensing machines near pachinko parlors.

TOKYO (Nikkei)--In late February, the Financial Services Agency released a document that, unintentionally, shed an interesting light on how the agency's hard-line policy is making life harder for financial institutions.

The document is a booklet designed to answer questions about the law on sales of financial products, which came into effect in September.

The legislation, which introduces tougher rules for financial businesses so as to better protect investors, has proved to be a huge drag on the sector. Banks and brokers complain that the tighter regulations have made it much harder to sell financial products, depressing monthly sales of investment trusts by half.

The agency hopes the booklet will clear up misunderstandings about the legislation that might be causing unnecessary confusion among investors and financial institutions.

The booklet's questions themselves paint a fairly clear picture of what is happening at branches of banks and brokerages: "Is it true that the law prohibits financial institutions from selling or recommending high-risk financial products to old people?" and "Is it true that the law requires financial institutions to grasp the state of assets of their customers before each transaction with them?"

The blame for this mess does not totally rest with financial institutions and their possibly poor understanding of the law. The agency's tough, punitive stance in dealing with banks and other financial firms has also contributed to creating the confusion.

Fearing that they will face harsh punishment for any violation, financial institutions have understandably overreacted to the new legal requirements. It is indeed a difficult challenge to strike a good balance between protecting investors and savers and promoting the financial markets and businesses.

The agency's policy now appears to be tilted toward protecting consumers. It has, for instance, enacted legislation to impose lower interest rate caps on consumer loans as a step to protect borrowers, putting small nonbank lenders in financing straits.

However, the agency is showing, or feigning, calm indifference to the dire state of ShinGinko Tokyo, a bank created by the Tokyo metropolitan government mainly for cash-strapped small businesses but which itself is stuck with massive bad loans.

The agency would say the bank is a public lender supported by the metropolitan government and should be treated differently from private institutions. But the financial prospects of the bank, which manages 400 billion yen in private savings, are unclear, with a plan for recapitalizing it facing opposition from the metropolitan assembly.

There are many good reasons for the agency to take action to prevent the bank's woes from causing any disruption to the banking system as a whole. The inconsistency in the agency's behavior appears to reflect the lack of a clear consensus on the role of the banking regulator in normal times.

(The Nikkei Tuesday morning edition)

TOKYO (Nikkei)--Facing a steady fall in the number of shareholders, a growing number of companies listed on the first section of the Tokyo Stock Exchange are offering special rewards and other enticements to attract more individual investors.

Japanese stocks have fallen sharply since the U.S. subprime crisis erupted last summer, and retail investors have been steadily fleeing the depressed stock market.

Under TSE listing rules, companies traded on the first section are required to have at least 2,000 shareholders. If the number dips below that level at a firm's annual book-closing, the company is given a one-year grace period. If it fails to boost the number above the minimum threshold within a year, the stock will be transferred to the TSE's second section.

Seven of the firms that are traded on the first section and close their books in March had less than 2,000 shareholders at the end of September 2007. Thirty-eight of them had less than 2,500, and 99 firms had fewer than 3,000.

Seven of these companies, including TOC Co. (8841) and JSP Corp. (7942), have since instituted systems that give special treatment to their shareholders, in a bid to hold onto them.

For example, Roland DG Corp. (6789), a Shizuoka Prefecture-based manufacturer of electronic music instruments, has instituted a system under which its shareholders are rewarded with free prefectural specialties. Through this measure, "we hope to expand the base of investors who will hold our stock over the medium and long terms," a company official said.

Sumitomo Pipe & Tube Co. (5457) in February lowered its minimum trading unit from 1,000 shares to 100 to make it easier for retail investors to buy its stock.

Individuals accounted for nearly 40% of the trading value on the TSE's first section two years ago. However, the ratio was as low as 17.5% in January.

(The Nikkei Wednesday evening edition)

TOKYO (Nikkei)--Tokyo's Harajuku district, long a trendsetter in youth culture and street fashion, has become a magnet for foreign visitors to Japan. And to capitalize on this trend, a local business association is offering limited-time guided tours of popular shops in the area.

The tours, which began last year, are conducted only around the Chinese New Year holidays -- a high travel season among Chinese. Tourists from overseas have become an important customer segment for many Harajuku stores -- some of which generate 40% of their sales from non-Japanese customers.

A recent tour had just five participants -- travelers from Hong Kong, France and South Korea -- about half the average. One of the tour participants was a 28-year-old woman from Hong Kong donning Gothic lolita fashion -- a subset of Japanese youth fashion -- that she said she bought on a visit to the area last year. Making her sixth trip to Japan, Harajuku has become a favorite of hers and she has visited many times. Nevertheless, she explained she wanted to go on the fashion tour because she thought it would show her a side of Harajuku that she had yet to discover.

Volunteer interpreters lead 90-minute fashion tours in Harajuku.

Visitors from mainland China, Hong Kong and Taiwan account for more than 30% of all foreign tourists to Japan. These Asian travelers have a "strong appetite for shopping," according to the chairman of the local business association that is the main planner of the tours. With this year's Chinese New Year holidays falling on Feb. 6-12, a total of 11 Harajuku fashion tours -- aimed in part to spread the latest fashion trends to other countries via word-of-mouth -- were offered from Feb. 7-22.

The 90-minute tours, led by three volunteer interpreters speaking in English, Chinese and Korean, took participants to about a dozen shops located not only on main streets but also on the back streets known as Ura Harajuku.

A 33-year-old French flight attendant said this was his first time visiting Harajuku. An avid reader of articles about Japanese animation and fashion, he said he wanted to see with his own eyes what he had read. While his perception of the Japanese was serious and hard-working, he saw many teenagers and twenty-somethings in eccentric fashion during the tour and commented that Harajuku is packed with young people who want to rebel against society.

Another tour participant was a 26-year-old South Korean student. A big fan of Japanese casual fashion, this was her third visit here. "Magazines in South Korea often have special articles about Harajuku," she said, adding that whenever she comes to Japan, she makes sure to check out the shops that she has read about.

Likewise, a visitor from Hong Kong also said she always checks Harajuku's latest information back home.

One of the stops on the tour is X-girl, a street fashion store for teenage girls and women in their 20s. At this shop, purchases by foreign customers account for 20-30% of sales. Chinese shoppers are particularly big spenders, usually buying 100,000 yen worth of items, said a store employee, adding that purchases exceeding 200,000 yen are not uncommon. According to research firm Nielsen Co., Chinese travelers spend an average 170,000 yen on shopping per overseas trip.

Chinese shoppers are so enthusiastic about X-girl that when premier products like sneakers and watches developed jointly with other brands go on sale, they even line up before the store opens, according to an X-girl store employee. Because people from mainland China face travel restrictions, these shoppers are presumably from Hong Kong and Taiwan.

"They must be checking the latest information on our Web site and come to Japan in time for the release dates," said a sales and promotion officer at B's International, the operator of X-girl stores.

Tour participants shop at casual clothing shop Aeropostale.

At the Harajuku location of toy and interior goods retailer Kiddy Land, foreign customers were responsible for more than 40% of sales last fall. The shop was already popular among Westerners residing in Japan, but it recently started attracting Chinese visitors as well. "The ratio of foreign customers only keeps rising," said the manager of the store, which started making advertisement signs in English, Chinese and Korean a year ago. It also makes sure its event news is sent to the media in China and South Korea to improve its name recognition abroad.

Casual clothing shop Aeropostale Original Dept. also generates more than 20% of its sales from foreign customers, and thus extended its winter sale to the Chinese New Year holidays.

According to an estimate by the Japan National Tourist Organization, 9.8% of all overseas visitors to Japan go to Harajuku. This means that, given an estimated 8.3 million non-Japanese tourists last year, about 800,000 foreigners visit Harajuku every year. Harajuku's foreign visitor ratio is still a far cry from top destination Shinjuku's 26.7%, but it beats the 8.6% for Akihabara, the electronics shopping district.

Said the head of Harajuku's local business association: "The numbers show that the foreign perception of what Japan is known for is shifting from electronics to fashion."

--Translated from an article written by Nikkei staff writer Keisuke Nakano

(The Nikkei Marketing Journal Wednesday edition)

TOKYO (Nikkei)--The Bank of Japan will by the end of the year start publishing data on prepaid electronic money services, such as Edy and Suica, covering the amount of settlements made as well as the outstanding balance and issuance figures for IC cards, it was learned Saturday.

The BOJ wants to have accurate information on the use of these smart cards, as it expects the spread of e-money to have a greater impact on the supply/demand status and circulation of coins.

The bank has noted that the circulation of small-value coins has been declining since the introduction of e-money services.

A more serious episode still started last summer, when a system for vetting new buildings was introduced in reaction to the faking of earthquake-proofing data—itself a reaction to hasty new regulation brought in a few years back. The housing ministry was unable to get new software for the new system running in time. New-building approvals ground to a halt, and new construction fell by 40%.

Slowly, matters are righting themselves—new construction in December was just one-fifth below levels a year earlier. But the extraordinary effect of a single bureaucratic bungle has been to knock 0.6 percentage points off Japan's growth. The building-standards fiasco was one reason for the reduction in the government's growth forecast for the fiscal year to the end of March, from 2.1% to 1.3%.

Internet surpasses magazines for ad spending

02/22/2008

How has the length of women's hair, assuming a linkage with the health of the economy, influenced related businesses? The market for hairstyling products, such as hairsprays and gels, are estimated to have peaked in 1994 at 102.5 billion yen in terms of shipments. Then it showed year-on-year decreases for a while, along with falling per capita spending on styling products. Although about 80% of women continued to use those products, they used them less frequently, switching sometimes to products like waxes for the tips of the hair. The market hit bottom in 2004 at 59 billion yen, ending a "lost decade" for hairstyling products.

Though the longest economic expansion since the end of World War II has continued, the consumer confidence index fell for 10 months running to hit a record low for six years and one month in January, according to the Cabinet Office's Economy Watchers survey released on Feb. 8. With many observers talking about a downturn, Kao's data suggest that women's hair will likely get shorter again.

"Women's hair may get shorter, but shorter hairstyles will not dominate," said Kotaro Nuriya, brand manager at Kao's Premium Hair Care/Hair Make Group. He bases his view on the fact that a growing number of women are pulling their hair together in the back or up, as in the chignon style. Kao began including the chignon in its survey in November 2002, and its use has risen 10% to about 30% among women in their 20s recently.

TOKYO (Nikkei)-- The ancient capital has many interesting spots to visit in addition to the famous temples and shrines that are its main attractions.

Nikkei Plus 1 recently asked people who have visited Kyoto more than five times to recommend the best places to see in the city.

According to people of all ages and both sexes, the top spot is "Tetsugaku no Michi (The Philosopher's Walk)." "I recommend it when you want to have a quiet time away from the hustle and bustle of a large city. Take a stroll down the narrow path and you'll find something new about Kyoto," said a woman in her 50s. "It soothes frayed nerves," said a man in his 50s. As these comments indicate, the place's calm and relaxing atmosphere appeals to many visitors.

Many people said the passage changes its personality according to the season. In autumn, when the leaves change colors, "strolling through the tunnel of brilliantly colored overhanging leaves is quite enjoyable," said a woman in her 20s. Many others prefer to go there in spring, saying the cherry trees that run along the stream are simply enchanting when in full bloom.

In second place is Arashiyama Park. Managed by the Kyoto prefectural government, the park has three main sections, including Nakanoshima, which lies adjacent to the Katsura River with the Togetsukyo Bridge in the center. The park is favored mainly by people in their 20s to 40s, especially men in their 40s.

A well-known place for viewing cherry blossoms and the turning leaves, the park is recommended predominantly for its natural beauty. Many people go there more than once because they say the park looks radically different from season to season. "It's a nice place for a leisurely walk, but I recommend early mornings to avoid the tourist crowds," said a woman in her 20s.

Kamo Riverside

Ranked third and fourth are places that offer leisure opportunities combined with the varying appearance of Hozugawa Ravine at different times of the year. The Sagano tram, finishing third, is recommended for its ride down the ravine. "Even the tram itself is interesting to look at," said a man in his 40s. Another said that even small children can enjoy the ride.

Fourth-place Hozugawa Kudari offers the experience of rafting down the Hozu River, rather than the quiet enjoyment of Kyoto, thus widening the scope of the city's tourism, said a woman in her 20s.

The fifth-ranked spot, Kamo Riverside, is recommended by a woman in her 20s for the slow passage of time that one enjoys while sitting along the banks of the river. Others point out the pleasure of eating traditional Kyoto cuisine on the balconies set on top of the Kamo riverside in summer while watching the river run by.

People generally agree that it is relaxing to enjoy the natural surroundings and interesting old structures unique to Kyoto, with no skyscrapers in sight. The atmosphere of the city appeals to many, as indicated by the selection of such places as Shijo-dori, the main street of Kyoto, and Ponto-cho, home to many traditional Japanese-style bars, even though they are outside the top 10.

Kyoto is home to many venerable stores that sell everyday items. The survey asked people to recommend souvenirs to buy other than Japanese sweets and pickles. Aburatori-shi, or cleaning pads for faces, were the first choice by far, followed by folding fans, incense and scentbags.

Souvenir shopping increases the fun of traveling. "Budget permitting, I recommend buying a kitchen knife from Aritsugu, a well-known store stocked with high-quality cooking utensils," said the chief editor of the travel magazine Mook, published by Lmagazine Co. He also suggests getting chopsticks, especially those sold at Ichihara Heibei Shoten, as they appeal to both men and women.

The same reviewer went on to recommend a pair of jeans available only at a Kyoto outlet of Osaka's Shins. Sold under the Denime brand, the jeans, called the Kyoto model, sell for 19,950 yen per pair with the name KYOTO printed on the label. The store offers the jeans in 79 combinations of waist sizes and leg lengths, so buyers do not have to alter them.

<< Survey Method >>

Nikkei Plus 1 conducted an Internet survey via research firm Macromill Inc. in early September last year that asked adult men and women who had visited Kyoto at least five times in the past to choose the best places, structures and neighborhoods to visit in the city from a total of 89 possibilities, with several travel magazines commonly available at bookstores used as reference materials.

The following were excluded from the survey: 1) Temples and shrines, including annexes and gardens; 2) Spots open to the pubic for less than one month each year, such as the Kyoto Imperial Palace, which allows visitors only in spring and autumn; and 3) Restaurants and general merchandise stores.

The respondents were first asked to pick their five favorite spots, and then to choose the one they liked best and the reasons for selecting it. The best spots were then ranked. Respondents consisted of 129 men and 129 women who were at least 20 years old.

(The Nikkei Plus 1 Sept. 22 edition)

TOKYO (Nikkei)--In an attempt to depart from current rules-based financial regulation, the Financial Services Agency has drawn up a new set of operational guidelines that will serve as a code of conduct for banks, insurers, brokerages and other institutions, The Nikkei learned Sunday.

The move represents the FSA's effort to shift toward a principles-based regulation system, under which financial institutions will follow a code of conduct, such as providing fair and accurate information to customers and maintaining solid financial bases.

With the shift, the FSA hopes banks, brokerages and insurers will voluntarily end business dealings with entities that fail to abide by the guidelines.

The FSA has been working with the financial sector to compile basic business principles since December of last year. It will unveil on Monday a code of conduct consisting of 14 basic principles to be followed by private financial institutions. After a period of industry comment, the FSA will finalize the content as early as March.

The FSA's decision stems from its thinking that the current rules-based regulatory approach prevents financial institutions from acting flexibly to serve customers and prevent fraud. U