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Japan housing starts down 20.7% in March, up 0.3% in FY2008

According to data released earlier today by the Ministry of Land, Infrastructure, Transport and Tourism, new housing starts in Japan fell 20.7% in March compared to a year ago. This was the fourth consecutive month of decline on a year-on-year basis, and the total amount of new floorspace declined by 22.9% against a year ago. By category, owner-occupied home starts declined 13.1%, falling for the sixth straight month. Rental home starts fell 11.2% for the fourth consecutive month of decline, and new condominium starts dropped a whopping 42.1%, also for the fourth consecutive month.

In a separate report, the ministry also announced that new home starts in fiscal 2008 stood at 1,039,180, up 0.3% from FY2007. This was the first increase seen in two years. The number of homes built for owners increased by 0.4% to 310,664, while the number of rental homes started increased 3.2% to 444,747. The number of condominium units started increased 3.5% to 272,680 - though the strongest part of this increase was amongst units of cheaper construction.

The total amount of floorspace created in FY2008 was up 2.3% against the previous year, showing the first increase in two years.

Family Mart to enter the Vietnamese market

Just two weeks ago, Seven-Eleven announced that it would be entering the Indonesian market. On the heels of that news, Family Mart announced today that it has plans to enter the Vietnamese market. Family Mart will be forming a joint venture with Vietnam’s Phu Thai Distribution and Investment Group as well as Itochu. Apparently, Family Mart’s first shop will be opened in Ho Chi Minh, and the firm aims to open 300 locations in Vietnam over the next five years.

Government to encourage workers to take more paid leave?

Over 50% of paid vacation allocated to Japanese workers goes unused each year, and the government is currently looking at way to encourage more workers to take paid leave as part of an effort to increase domestic travel and tourism. According to today’s Nikkei, the government is examining a host of measures that could reduce overcrowding at peak travel times and create new three day weekends.

Fixing holidays so that workers have more three day weekends makes good sense, and could certainly make it easier - though not necessarily more affordable - for workers to travel domestically. The government is also considering staggering summer breaks at schools in order to reduce overcrowding.

However, the campaign to encourage workers to take more paid leave is the most interesting. Apparently, the government has discussed changing accounting regulations to require firms to book reserve provisions for unused holidays as debt.

Would this work? The government estimates that if workers took their full allotment of paid days off that about 1.5 million jobs would be created and about 12 trillion yen in revenue could be generated. Of course, these figures assume that workers will actually travel - and not to Korea - on their extra paid days off and newly found three day weekends. The Nikkei article gives no detail behind the numbers, but they would be good to see.

Job prospects looking bleaker for 2010 graduates

According to the results of a recent Nikkei poll, Japanese firms intend to cut hiring of college graduates by 19.6% next spring, which would be the first drop since 2003 and the sharpest drop in 34 years. The figures released today are much worse than preliminary survey results that were released on March 15 and indicated that companies were planning to cut graduate hiring by 12.6%.

The Nikkei points out that Toyota is looking at a 49% reduction in hires, while Sony is planning to cut hires by 44% and Toshiba is looking at a 40% cut in 2010.

In terms of firms looking at hiring more people, numbers fall in line with what we have expected: Security firm Secom intends to hire 36% more graduates next year, while Tokyo Electric Power is looking at hiring 29% more graduates.

March corporate goods price index down 2.2%

Yesterday, the Bank of Japan released its monthly Corporate Goods Price Index, and the report showed a 2.2% decrease in March wholesale prices compared to a year ago. Wholesale prices have now fallen for three consecutive months, and the fall last month was the largest on record since 2002.

Last August, wholesale prices shot up 7.1% and hit a 27 year high, as commodity prices peaked out. Reuters goes as far to say that “[W]ith both domestic and external demand faltering, Japan could be the slowest among major economies to recover from recession.” This, of course, does not jive with Prime Minister Taro Aso’s New Year’s promise that Japan will be the first nation to recover from the global recession. Read more

Seven-Eleven to set up shop in Indonesia

A few days ago the Nikkei reported that Seven-Eleven Inc. has reached a licensing agreement with Modern International Group, an Indonesian firm that will bring Japan’s largest convenience store brand to Indonesia as early as this fall. While the Nikkei notes that strict regulations often make it difficult for firms to set up shop in Indonesia, plans are for the first locations to open in Jakarta and be followed by stores in Bandung and Surabaya.

Nikkei Index lost 35% in FY2008; Market caps battered

At the opening of fiscal 2008, the Nikkei Stock Average stood at 12,525.54 points. After dropping 126.55 points yesterday, the Nikkei closed at 8,109.53 points for a 35.3% drop over the financial year. This morning’s Nikkei reports that corporate pension funds were heavily battered in FY2008, and estimates losses at 17.4%. Banks have also been affected by the downturn in share values, as all three megabanks (Mitsubishi UFJ, Mitsui Sumitomo and Mizuho) are looking at sinking into the red for FY2008.

In another article, the Nikkei points out that a year ago, 82 Japanese firms possessed a market capitalization of one trillion yen or more. As of this morning, that figure stood at 49 - for a 40% decrease.

Toyota, the largest Japanese firm by market cap, saw a 37.2% drop, while Mitsubishi UFJ saw a 40.6% fall, and both Mizuho and Mitsui Sumitomo suffered drops of over 45% in their market capitalizations.

Behind the drops in market caps, according to the Nikkei:

Foreign funds have been among the major sellers of these stocks since last September.

“The more the shares were owned by foreigners, the steeper their falls were,” says an official at Daiwa Securities Co.

Firms that benefit from emerging-nation demand, such as trading houses, were also among the market cap losers.

“Until early last year, there was a view that the economies of advance nations and those of emerging countries do not move in tandem,” says chief economist Yoshikiyo Shimamine of the Dai-ichi Life Research Institute, explaining that such a view did not hold and only amplified the repercussions.

This quote got me confused: “Until early last year, there was a view that the economies of advance nations and those of emerging countries do not move in tandem (sic).”

Amongst whom? Salespeople? Where do exports go?

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