Warren Buffett: Japan Disaster Presents A ‘Buying Opportunity’

Warren Buffett: Japan Disaster Presents A ‘Buying Opportunity’

in South Korea (MarketCall.net) – Billionaire investor Warren Buffett believes Japan’s devastating earthquake is the kind of extraordinary event that creates a buying opportunity for shares in Japanese companies.

Japan, the world’s third-largest economy, has been battling to bring an overheating nuclear plant under control after it was battered by the March 11 earthquake and tsunami that rattled global markets and prompted massive intervention in currency markets by the Group of Seven industrial nations.

‘It will take some time to rebuild, but it will not change the economic future of Japan,’ Buffett said on Monday on a visit to a South Korean factory run by a company owned by one of his funds. ‘If I owned Japanese stocks, I would certainly not be selling them.

‘Frequently, something out of the blue like this, an extraordinary event, really creates a buying opportunity. I have seen that happen in the United States, I have seen that happen around the world. I don’t think Japan will be an exception,’ said the 80-year-old investor, dubbed the ‘Sage of Omaha’ for his successful long-term investment strategy.

Buffett heads Berkshire Hathaway Inc, which has substantial insurance and utility investments globally.

Japan’s Nikkei share average rose 2.7 percent on Friday, buoyed by the G7 support, but still ended the week down around 10 percent, with some $350 billion wiped off share values — the market’s biggest weekly slide since the global financial crisis in 2008. Japanese markets were closed on Monday.

Buffett said Berkshire Hathaway, which at the year-end was sitting on $38 billion of cash equivalent and last week bought U.S. specialty chemicals maker Lubrizol for $9 billion, was looking for more large-scale acquisitions anywhere in the world.

In his annual letter to Berkshire Hathaway shareholders last month, Buffett had said he was looking for more acquisitions.

‘The United States is most likely where we will do something,’ he said at a ground-breaking ceremony for a South Korean factory run by a unit of an Israeli firm owned by his investment vehicle.

Buffett will have yet more money to invest after Goldman Sachs buys back $5 billion of its preferred stock from Berkshire Hathaway, which the fund bought at the height of the global financial crisis.

EYE ON KOREA

Buffett, ranked the world’s third-richest man by Forbes this year, said he was also looking to buy entire businesses and large-cap shares in South Korea — where Berkshire is already a leading shareholder in steelmaker POSCO.

He said geopolitical risks associated with North Korea had not curbed his interest in South Korea, Asia’s fourth-largest economy. Berkshire also owns a stake in Chinese car and battery maker BYD.

Buffett did not disclose any holdings in Japan on Monday, and Berkshire Hathaway’s annual report did not show any major investments there. He had been due to visit Japan later this week, but canceled due to the earthquake.

Unlike many foreign fund managers, Buffett, who arrived in the southeastern city of Daegu on Sunday by private jet, won plaudits from ordinary South Koreans.

Sporting gray sweat pants and running shoes, Buffett was greeted by signs reading ‘Mr Buffett: Daegu Loves You.’

Many in this country of nearly 50 million people have bad memories of the 1998 Asian financial crisis when a deal with the International Monetary Fund bailed out the country but at the cost of tens of thousands of jobs.

Some U.S. hedge funds have been branded ‘vultures’ for buying South Korean assets on the cheap in the wake of that crisis.

‘It’s a once in a life-time opportunity. I’m honored to meet such a respected businessman,’ said Seo Hyun-joo, a housewife wearing Korean traditional dress.

Buffett later meets South Korean President Lee Myung-bak in Seoul and heads to India on Tuesday to launch his firm’s insurance selling portal.

Source: http://marketcall.net/

Japanese Stocks Poised for Bounce to 11,000

 

Japanese Stocks Poised for Bounce to 11,000
Japanese Nikkei 225 Stock Average, which has lost 9.6 percent this year, may rise 20 percent through February next year, according to a technical analysis by Mitsubishi UFJ Morgan Stanley Securities Co.

The gauge may climb toward 11,408, the intraday high for the year achieved on April 5, said Naohiko Miyata, chief technical strategist at the brokerage unit of Mitsubishi UFJ Financial Group Inc., Japanese biggest bank by market value. Miyata says the gauge may be set for a sustained period of advance as the yen enters its final phase of gains against the dollar and after the measure found support at a key Fibonacci level.

Day-by-day we are seeing more signs that the gauge has bottomed out. Miyata said in a telephone interview. It;s very possible that the Nikkei will start testing its April high in a pattern similar to the one we saw last year.

Miyata also believes the yen may start weakening next month, helping to boost the Nikkei.

The dollar-yen rate has been moving in an 11-month cycle, touching its low when it enters a new phase, he said. The Japanese currency rose to its highest level for 2009 when it traded at 84.83 on Nov. 27. Taking that as a starting point, the end of the 11-month cycle will be this month.

The yen should start to weaken significantly from next month, with the Nov. 3 Federal Open Market Committee meeting as a turning point, Miyata said.

As the saying goes: buy on expectation and sell on fact. If the U.S. does carry out quantitative easing as people expected, there will be selling of the yen, Miyata said.

The Fibonacci sequence was identified by Italian mathematician Leonardo Fibonacci in the 13th century. The ratio between the numbers, about 0.618, is known as the golden mean, and is used by technical analysts to find levels of resistance and support.

According to Paul Chesson, manager of Invesco Perpetual’s Japan fund, which tops the best 10-year performance tables, it’s all about timing.

In 2002, he said after the Nikkei bounced that it was “a false dawn”. And again in 2006, he said that valuations were “too high” to be a bull. He was right both times.

“People usually sell Japan at the low points, and are all over it like a cheap suit when it has gone up for a couple of years. Last time everyone recommended it was 2006 when the market was 100pc higher than it is today.

“If you buy on a high you’ll be disappointed,” said Mr Chesson, who says valuations are a key factor today. “The market was too expensive 10 years ago, but now it’s too cheap. A fund manager only invests in 30 companies, not the whole market, so he can still perform well even if the market does not.”

Mr Chesson’s change of heart is the main reason why some investors are optimistic.

Deflation has long been a factor in Japan, but Mr Rose said this should not concern the investor too much.

“It has been tackled several times over the past 10 years, but I invest in companies, not politicians, and these will succeed.”

Although Japan may be geographically linked to the big emerging markets of China and Russia, economically it could not be more different.

Japan is a developed market and so does not have the same room for exponential growth that its neighbours have experienced in the past decade – and are expected to continue to have.

He invests in companies that are undervalued. He stresses that he picks companies, rather than invests in sectors or the stock market as a whole.
 

 

Japan Sets Interest Rates at 0 pct

Japan’s central bank has launched a 5 trillion yen ($60 billion) effort to buy a wide range of debt, including government bonds, corporate IOUs, real-estate investment trust funds and exchange-traded funds, setting off global concerns that central banks around the world are prepared for more quantitative easing.

The moves by the Japanese and U.S. central banks indicate that global monetary policy is approaching the end of the road, having exhausted nearly every tool of monetary policy available to stimulate economies that remain resistant to job growth.

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George Soros agree on Japanese Intervention

Soros Applauds Japan Intervention to Weaken Yen

Billionaire financier George Soros said on Wednesday that Japan was right to intervene in foreign exchange markets to bring down the value of the yen.

“Certainly, they are hurting because the currency is too strong so I think they are right to intervene. They had a real estate boom and then a crash in banking … It’s 20 years now, and they are still just struggling along.” Soros said at a Reuters Newsmaker event.

Japan sold yen in the market on Wednesday for the first time since 2004 and said it would do so again to prevent the currency’s rise from hurting exporters and threatening a fragile economic recovery.

Billionaire financier George Soros spoke at a Reuters Newsmaker event on Wednesday.

tag: JAPAN’S INTERVENTION TO BRING DOWN VALUE OF YEN

UPDATE: September 15, 2010 10:40 ET (14:40 GMT)

www.intermoney.org

Japan Intervenes To Weaken Yen And Warns Of More

JPY yen

Japan intervenes to weaken yen and warns of more

Japan sold yen in the market on Wednesday for the first time in six years and promised more to come in a bid to stop the currency’s relentless rise from hurting exporters and threatening a fragile economic recovery.

Fresh after victory in a party leadership contest, Japan’s Prime Minister Naoto Kan appeared to be stepping up efforts to wrench the country out of deflation by targeting yen strength, which has weighed on stock prices and corporate profits.

Estimates varied on how much Japan has spent in its first intervention in the foreign exchange market since 2003-2004, when its forked out 35 trillion yen ($409 billion).

Dealers suggested Wednesday’s intervention amounted to about 300-500 billion yen ($3.6-$6 billion), though some reports put it closer to 100 billion yen.

The U.S. dollar was boosted further after an official at Japan’s Ministry of Finance said intervention was not finished. It climbed about 3 percent on the day to more than 85.50 yen, having dropped to a 15-year low of 82.87 yen earlier.

Unlike in previous intervention, the Bank of Japan will not drain the money flowing into the economy as a result of the yen selling, sources familiar with the matter said.

That indicated the central bank plans to use the sold yen as a monetary tool to boost liquidity and support the economy.

Authorities that sell their own currencies to weaken them often issue bills to “sterilize” the funds and keep the excess money from becoming inflationary. In Japan’s case, it wants to promote inflation since the economy has been dogged with deflation for much of the past decade

The central bank may follow up with additional steps, such as buying more government debt, economists said.

“SYMPATHY”

Finance Minister Yoshihiko Noda, who will reportedly keep his post after a cabinet reshuffle, indicated Tokyo acted alone on the yen. He said he was in contact with authorities overseas and analysts expected Japan to be spared international criticism.

“Japan will be seen as a special case,” said Simon Flint, global head of foreign exchange research with Nomura in Singapore. “Obviously, its economy has been in significant trouble for a while, stocks have been depressed for some time, export performance relative to the Asian peer group has been very weak,” he said.

“To some degree there will be some sympathy in the rest of the world for Japan’s predicament.”

U.S. officials at the Federal Reserve and the Treasury declined immediate comment.

Analysts doubted whether Kan’s government was ready for a protracted battle with markets similar to the 15-month yen selling spree earlier this decade since that campaign prove ineffective at halting the yen’s strength for long.

WILL THE YEN STOP RISING?

Kan’s government has been trying to talk down the yen as it strengthened beyond 90 per dollar

“The government probably wanted to stamp out those views. But the question is: Will the yen stop rising from here? It’s not clear.”

USD/JPY’s recovery from around the session lows of 85.00 comes as a Japanese government official confirms the MOF/BOJ has intervened in European markets Wednesday

* Japan PM Kan: Intervened in fx because yen reached level where action was needed.

Japan’s Ministry of Finance said intervention was not finished. Japanese news agency Kyodo cited a ministry official saying Japan had intervened in European markets and will intervene in New York trading hours if need be.

www.Intermoney.org – Market Talk

Wednesday. September 15, 2010

UPDATE: 07:25 ET (11:25 GMT)

USD/JPY Rally May Be Attacked Next Week

USD/JPY Rally May Be Attacked Next Week

The BOJ’s first intervention for the time since 2004 leads to a 200 sen rise in USD/JPY.

Mizuho Corporate Bank’s Nicole Elliott says the talk that is Y100B was spent, much of it around 83.30 with the rate topping out so far just above the pivotal 85.00 level. Elliott says looking at the charts, the move started at the bottom of a wedge formation that has dominated trade since late 2008 and there is now a potential ‘bullish engulfing candle’ which suggests the rate will hold above its 82.87 low for the rest of the week at least.

source: Citigroup

Citigroup: Is USD/JPY A ‘Buy On Dips’ Now ? the bank says

Citigroup: Is USD/JPY A ‘Buy On Dips’ Now ? the bank says

Will US reaction to the BOJ intervention dictate its success?
Citigroup reckons that investors may be overestimating external political concern, especially compared to the trade problems created by the CNY.

“If US authorities simply continue to decline to comment, this is implicitly turning a blind eye to the Japanese action and could serve to disappoint those looking for stronger opposition,” the bank says, suggesting that the intervention may well prove more successful than expected.

The bank recommends “maintaining short JPY positions and dips in USD/JPY associated with lulls in intervention could be opportunities to further build longs.

http://www.Intermoney.org – Market Talk

Wednesday. September 15, 2010