Rising sun smiles again on Japanese markets

The Japanese investment market will continue to shine over the next two to three years, according to one of Japan’s biggest fund managers.

DLIBJ Asset Management senior relationship manager Toshikazu Nishimura

The Japanese investment market will continue to shine over the next two to three years, according to one of Japan’s biggest fund managers.

DLIBJ Asset Management senior relationship manager Toshikazu Nishimura

The comments come as DLIBJ Asset Management launch their first wholesale in-vestment product into the Australian market with distribution through third party marketing and business developer Shed Enterprises.

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The company's flagship equities product, the Japanese Equity Topix Research Ac-tive Portfolio, is aimed at wholesale investors with the offer of investment into Japanese pension and super funds but the company says it may also offer retail of-ferings in the near future.

"Now is a good time to think about investing in Japan. As asset managers we can't be too bullish on the Yen but can't see weaknesses like those of the early nineties either," Nishimura says.

“Fund managers are overweighting technology for the two to three years and with rising interest rates there will be a correction but good mid term growth exists,” Nishimura says.

Stock selection will also lead to increased performance says Nishimura as investors should trend towards companies labelled as ‘New Japan’, which have gone through restructuring and taken on a more aggressive approach to generating profits.

“These stocks will be the ones to watch but traditional old style company stocks will turn but just over a much larger time frame,” he says.

Nishimura says the companies working in the new environment are no longer holding onto notions such as employment for life and are concentrating on share-holder interest while working in a newly deregulated environment.

“Our feeling is the same sort of changes are occurring now as did in the early nine-ties in the USA in the areas of application of technology with a more forceful man-agement and investment style,” he says.

Nishimura says the signs of the change in the Japanese economy are visible with the breaking down of barriers between the investment, banking and insurance in-dustries and the introduction of new accounting standards designed to increase transparency for local and overseas investors.

World View

Swiss Re, one of the biggest reinsurance groups in the world, has purchased US-based Underwriters Re, the property and casualty reinsurer of Alleghany Corp, for $US725 million ($A1.1 billion). The sale will establish Swiss Re as "a leading participant in the broker channel reinsurance market in the US", the group says. Not included in the deal are the London-based Lloyd's operations of Underwriters Re, which Alleghany will retain. At the end of 1998, Underwriters Re had total gross premiums of $US549 million ($A840.5 million) and assets of $US1.7 billion ($A2.6 billion), excluding the Lloyd's business. Swiss Re is the second-biggest reinsurer in the world after German group Munich Re in terms of gross and net premiums.

One of the pioneers of Internet stock broking in the US, E*Trade, has joined rival Charles Schwabb in offering financial advice alongside its share trading operations. DirectAd-vice.com, a company that provides in-depth, customised investment advice online, announced a deal Thursday with E*Trade to offer its services to customers of the brokerage firm. The service, which normally costs $75 when accessed directly over the Internet, will be free to some wealthier E*Trade customers. Details of the deal remain under wraps. E*Trade is also weighing other human-advice initiatives, including possibly referring customers to independent financial advisers. DirectAdvice.com says it is having discussions with other online brokers and more-traditional securities firms. The company offers specific recommen-dations on asset-allocation, mutual funds and savings plans, which are generated after investors fill out a detailed questionnaire and input data about all their financial holdings.

Royal Bank of Scotland has devised a new friendly strategy to convince National Westminster Bank's shareholders to approve its offer for the high-street bank. It intends to make three separate announcements in coming weeks highlighting key aspects of the deal - vision, benefits and risk. Fred Goodwin, group chief executive, said: "We think that logic and facts will win this. It needs to be done on a more professional footing rather than just slagging each other off." The announcement triggered immediate and angry responses from rival bidder Bank of Scotland as well as NatWest, indicating tension is on the rise with just five weeks to go before the conclusion of the battle. The renewal of hostilities came as NatWest formed a strategic alliance with Chase Merchant Services to provide credit card acceptance services.

The bank sought to use the deal as further evidence it has the strength and depth to fight off its unwanted suitors. The takeover battle is due to come to an end on February 14.

Merrill Lynch is investigating an alleged misappropriation of $40 million from a Middle Eastern client's account into a Swiss bank account. Merrill says it has repaid the client, Arab International Bank, of Egypt, "for losses incurred as a result of an apparent misappropriation of securities by one former employee. We are pursuing both criminal and civil cases against the individual with a view to recovering the securities."

The funds were transferred from an account at Merrill, set up in 1989 by the Mideast bank's Bahrain branch, to a bank account at UBS AG in Geneva, according to an article in the Financial Times, which said the transfers took place in six different transactions between 1996 and 1998-five of them authorised by signatures of an Arab International employee who was deceased.