J-Vid of Interest - Jesper Koll Presentation

Another great presentation by Jeper Koll, the former head of equity research at JPMorgan Chase&Co in Tokyo, about where Japan’s economy might be heading.

It always amazes me how entertaining Jesper's presentations are.

Q&A Session

Following a list of Jesper's key points:

• Jesper is a believer in Abenomics

• Having lived in Japan for 35 years he can't remember seeing the financial-, business-, bureaucratic- and political elite so united in getting Japan's economy moving again

• Abe's Cabinet very pragmatic. Actually it is the most pragmatic in the G7

• Trade deficit is structural. Main cause not because of energy. Most of it is the result of corporate Japan's imports from Japanese companies producing in the exterior

• Yen is going to be a structural weak currency because of trade deficit

• Japan becoming dependent on global savings because of structural deficit. Thus, it needs to increase return on investment to attract global capital

• There is a return revolution taking place in Japan. And it is for real because Japan has been turning from a creditor country to debtor country. Thus, Japan is competing now on international capital markets in order to attract capital

• Japan never reduced its productive capacity, i.e. closed factories. But recently it has started to do so. Most Japanese cars are now produced outside Japan. Mazda was the last manufacturer moving outside Japan. Profitability in off- shore markets is better due to inefficiencies in the Japanese market

• Deindustrialization taking place in Japan. But it is not a bad thing, because it is taking place just at the right time when unemployment is at almost record low and Japan is beginning to run out of labor. Furthermore, it is spectacular for profits of Japanese companies. Margin increase of Japanese companies rather structural than cyclical.
• Demographic sweet spot  in Japan for younger people (20-35 years old). Because scarcity of young workers is going to become acute. Will lead to more regular workers in Japanese companies.