Sunday, June 7, 2015

Japan Post Holdings To Move Away From Yen


Japan Post is a Japanese state-owned conglomerate, through its subsidiaries, provides postal, banking, and insurance services in Japan. Its activities include postal operations; banking counter operations; insurance counter operations; sale of documentary stamps; operations consigned by local government entities; life and non-life insurance agency services; domestic distribution and delivery business, and international cargo transport and agency services for air cargo business; logistics business; real estate business; and merchandise sales. When talking with several of my contacts I was surprised they were unfamiliar with the company, it could be because it is quasi-government in nature and tightly tied to the government..

Japan Post as it existed from 2003 to 2007 offered postal and package delivery services, banking services, and life insurance. With over 400,000 employees and running 24,700 post offices it ranked as the nation's largest employer. One third of all Japanese government employees worked for Japan Post, as of 2005, it was said to be the largest holder of personal savings in the world. With ¥224 trillion ($2.1 trillion) of household assets in its yĆ«-cho savings accounts and ¥126 trillion ($1.2 trillion) of household assets in its kampo life insurance services, its holdings accounted for 25 percent of Japanese household assets. Japan Post also held about ¥140 trillion (one fifth) of the Japanese national debt in the form of government bonds. In 2007 Japan Post was privatized with the Japan Post Group companies operating the postal business.

That makes the group one of the largest institutional investors in the world. As of 2013, it ranked thirteenth in the Fortune Global 500 list of the world's largest companies. Privatization was put on hold in 2010, so currently the Japanese Ministry of Finance remains the 100% shareholder. However, plans unveiled in 2012 to list shares of the Japan Post Holdings Company within three years are moving forward and the government plans to list Japan Post Holdings Co Ltd and its banking and insurance units on the Tokyo Stock Exchange in late 2015 or early 2016. About 10 percent of each unit's outstanding shares will be offered in the IPO and could rake in 700 billion yen with the IPO proceeds slated to finance post-earthquake reconstruction of the country. This could in some ways be interpreted as the government selling off the family jewels. For years many economist have noted the Japanese people have always been the ones to buy their governments debt, this is a step-back from that policy.

Traditionally, with close ties to the government the investment strategy of Japan Post has been very conservative with low-yielding JGBs making up more than half of its portfolio. But as Japan Post and its two financial units prepare for separate initial public offerings later this year, they will take a more aggressive investment stance and chase bigger returns, said Nishimuro. Japan Post Holdings Co has hired Katsunori Sago, a former Goldman Sachs Group, Inc.'s executive as head of asset management at its banking unit as it reallocates its portfolio. The move will likely to shift a bulk of money from JGBs to riskier but higher-return assets like stocks and foreign bonds. In doing so I contend this will cement an attitude within the Japanese population that it is time to start shifting savings out of the yen and into other type of holdings. This may someday be looked on as a watershed event as to how the Japanese shift away from the yen to protect their wealth.



Footnote;  As always comments are welcome and encouraged. A prior article I wrote looks at how the financial news flowing from Japan has become so loaded with conflicts of interest and internal deals created to prop up one weak institution with another and of the possible ramifications. The article can be found below.
http://brucewilds.blogspot.com/2015/01/japan-is-about-to-enter-crisis-of-faith.html







3 comments:

  1. You might think that handling your investments is a simple matter of talking to the right wealth management company and then handing them a check. Here are some essential questions to ask your advisor before you entrust them with your portfolio. See more business portfolio analysis

    ReplyDelete
  2. I'm surprised that a place as small as Japan, where the corner store had fax machines 30 some years ago -apparently still moves so much physical mail. I guess it must be sort of a national Fedex, or Purolater???

    ReplyDelete
  3. I'm surprised that a place as small as Japan, where the corner store had fax machines 30 some years ago -apparently still moves so much physical mail. I guess it must be sort of a national Fedex, or Purolater???

    ReplyDelete