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Can’t afford to do background checks on your clients? Fuhgettaboutit

The top headline on the Yomiuri’s English site today was Brokerages aim to cut ties with gangs, which may or may not sound more sensationalist than it really is. At any rate, it is a tad misleading. The brokers themselves are not behind this effort, as the article’s first sentence points out: The “Japan Securities Dealers Association (JSDA) will prohibit securities firms from letting gang members open brokerage accounts and punish violators of the rule.”

We then learn that a mechanism for identifying accounts that should not be allowed is hoped to be in place “as early as fiscal 2008.”

The JSDA has no formal rule banning its members from dealing with known criminal groups.

“Keep moving, nothing to see here…”

5 IPOs Scheduled in July

Last July, we saw nine IPOs in Japan, but this year brings only five. Three will trade on the Hercules market at the Osaka Securities Exchange. One will be listed on Jasdaq and the fifth on the Fukuoka Stock Exchange’s Q-Board.

Chinese online game site operator Nineyou International is set to be the second mainland Chinese form to IPO in Japan, after Asia Media’s debut on the Tokyo Stock Exchange back in April. Nineyou is expected to raise something in the range of 20 billion yen by going public.

In June, the average IPO had opening prices over 80% higher than offering prices.

Total value of shares traded on China’s stock exchanges exceeds that of Japan for first time ever in April

As the OECD issued a warning on Thursday that China’s stock markets face the risk of “a marked correction,” the World Federation of Exchanges released their statistics on global stock market activity for April 2007. Looking at the “Value of Share Trading” data, one thing becomes clear: in April, the total value of shares traded on the Shanghai and Shenzen stock exchanges exceeded the total value of shares traded in Tokyo and Osaka for the first time ever.

In April, the combined value of shares traded on the Shanghai and Shenzhen Stock Exchanges added up to $645.3 billion, surpassing the $512.4 billion total traded on the Tokyo Stock Exchange and Osaka Securities Exchange.

Click on the graphic to see a comparison of Japan and China’s markets, in millions of dollars, from January to April of 2007 (exchange rates are calculated on the average rate for each month).

The OECD warns of a severe correction, and Andy Xie warns of collapse. We’re here to warn of lessons unlearned.

Percentage of Trades Done Online Down 4%

With the Financial Services Agency apparently carrying out its first ever survey on security measures taken by banks and other financial institutions to protect their online banking services, the Nikkei is reporting that 87% of stocks transactions performed by individual investors from October 2006 to March 2007 were done online.

That sounds high, but actually, data from the Japan Security Dealers Association shows that 91% of trades by individual investors were executed online in the six month period preceding October 2006.

This is the first time since 2002 that the percentage of trades done online by individual investors declined. Last year, 89% of all trades by individual investors were carried out online.

Steven Towns on Japan’s Big 3 Automakers

Over at Seeking Alpha, Steven Towns posted an article today entitled “Shares of Japan’s Big-3 Auto Struggling in ‘07, Is it Time to Buy?”

Seriously, he read my mind. I’ve been puzzling this one out over the past week and basically thinking along the same lines, charting and looking for an entry point. Mr Towns has some helpful charts on his post, so please go check it out.

Andy Xie: China about to go bust

Former star Morgan Stanley economist Andy Xie has described his fear of an imminent stock market crash in China in a recent interview with Reuters, saying:

I think it’s going to be bust very soon…People will be surprised. When the end comes, it’s going to be pretty bad.

But how bad is it now? In an article published at the South China Morning Post on April 18, Xie wrote:

College students are putting their tuition money into the market…stroke-stricken retirees get wheeled into branches of securities firms to trade.

As Matt as the Discursive Monologue points out, “When the Average Joes begin trading stocks, the mania is approaching a danger level.”

I couldn’t agree more. While Xie says that Chinese government may not be trying to slow down markets due to a fear of political backlash, Discursive Monologue writes, “I would suggest that a small, anticipated political backlash is insignificant compared to the ineluctable bust and suffering that follows a fiery mania like this.”

This is very true. However, I’m not sure exactly what the Chinese government could do to slow down the overheating in its equity markets. Governments in general seem very bad at easing out of these situations, though one is tempted to think that looking at the damage caused by the burst of Japan’s asset bubble would have been warning enough.

Might the world be in need of a bigger warning?

Individual shareholders on shareholders’ meetings: What Japan Thinks

The very well-written and informative website What Japan Thinks has recently published a translation of an opinion poll done by goo Research concerning personal investment habits in Japan. The survey found that 73% of respondents were either ’sometimes dissatisfied’ or ‘always dissatisfied’ with the contents of shareholder meetings, and that only 13.1% of respondents felt that individual shareholders were seen as important at the meetings.

By the way, if you don’t have What Japan Thinks in your RSS reader, you should.

Tough Monday for the Nikkei

It’s looking like it might be another tough week down at the Tokyo Stock Exchange. The Nikkei index slipped 5.3% last week, alongside the worldwide equity selloff prompted by the nosedive in Chinese stocks.

Bloomberg is reporting that Chicago futures contracts on the Nikkei are down to 16,865; As of 3pm, The Nikkei itself is down 575.68 points, to 16,642.25.

In a move that further seemed to spook investors, the yen suddenly made large gains against the dollar, moving to about 115.68, up almost 6 full points since February 23.

Japan’s stock market charges into the year of the boar

On the first day of trading in 2007, the Nikkei stock average gained 127.84 points (0.74 percent). Today’s session was a half-day of trading, and the Nikkei closed at 17,353.67, which is it’s highest level since April 21 of last year.

Insurance, communications, and electric power and gas stocks generally closed higher, while the losers included mining, steel and game software maker shares.

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