Rising Confidence Provides Further Evidence of an Economic Recovery in Japan


NEW YORK -- (BUSINESS WIRE) -- June 7, 2004

The Japan External Trade Organization New York (JETRO NY) released a newsletter today highlighting regional development in Japan. It can be viewed at:

http://www.jetro.go.jp/usa/newyork/focusnewsletter/focus34.html

  • Restructuring & Reform Helping to Improve Japanese Corporate Performance

    Restructuring and reform initiatives have been helping to restore
    efficiency and to improve the performance of Japanese firms. During the
    first quarter of 2004, Japan's gross domestic product grew at an impressive
    annual pace of 5.6 percent.

    Corporate profitability is also on the rise. A rising stock market, export
    growth and demand for digital appliances, have all helped net profits of
    listed companies to rise to a record ¥3.26 trillion ($29.02 billion) for
    the year ended March 31st. This is up 68% from fiscal 2002.

    Regional economies are also showing signs of strength. Economic activity is
    strengthening in the Tokai region, and industrial production indexes in
    Aichi, Gifu and Mie prefectures rose to new highs for five straight months
    through January 2004.


  • The Positive Outlook that is Emerging Does Not Eliminate the Need for
    Caution


    While the future looks far more promising for Japan than it has in over a
    decade, the need to maintain a balanced perspective should not be
    minimized. Important considerations include:

    - Lack of Income Growth: The trend toward greater consumer consumption
    is a positive sign, however, as in the U.S., this rise in spending is
    being largely generated through savings rather than a rise in income.

    - Rising Materials and Commodities Prices: While deflation remains a
    concern, Japan's progress and a worldwide rise in commodities and raw
    materials demand have now introduced price increases on the industrial
    level.

    - Export Dependency: Japan continues to be highly reliant on its export
    sector. It therefore remains highly correlated to events in foreign
    business and financial markets.

    - Maintaining Restructuring and Reform: In a democratic nation, dramatic
    change is generally only possible during times of duress when it is clear a
    break with the past is both important and necessary. It can only be hoped
    Japan will be able to persevere in its efforts to implement the
    comprehensive reforms and corporate actions necessary to build upon the
    changes that have been made.
  • Foreign Investors Have Begun to Realize Large Profits on Their Japanese
    Holdings

    During the late 1990s most internationally-focused investors were
    enthralled by the U.S. dotcom and seeming productivity miracle. Few were
    prepared to devote their energies and financial resources on an economy
    that appeared to be in permanent decline. A few brave foreigners, however,
    foresaw the opportunities and moved to realize the potential through new
    allocations of capital and the introduction of more efficient management
    styles and methods.

    One recent success is the example of Ripplewood Holdings, which is
    realizing a fourfold return on an investment in Japan Telecom in less than
    a year. That's on top of an even bigger achievement last February, when
    Ripplewood's four-year investment in the failed Long-Term Credit Bank of
    Japan culminated in one of the most anticipated initial public offerings in
    Japan in recent years.

    While there has also been concern that demand for Japanese equities has
    been largely driven by foreigners, one indicator of rising interest from
    retail Japanese investors can be seen in new data from six major Japanese
    securities firms that specialize in online trading. As of the end of the
    first quarter of 2004, they collectively held 1.15 million brokerage
    accounts -- an increase of 28% year on year. Additionally, during the
    first week of April Japanese retail investors traded the largest portion of
    stocks on the Tokyo exchange, at 32 percent, overtaking foreign investors,
    who made 22 percent of the trades. The following week, their share grew to
    37 percent, while foreigners traded only 19 percent of stocks.


Data and statistics have been compiled by JETRO from publicly-released media accounts. JETRO does not guarantee their accuracy, and any such information should be checked by the reader before they are used to make any business or investment decision.

For additional information, please contact Satoshi Miyamoto, Executive
Director of JETRO NY at Tel: 212-997-0416, Fax: 212-997-0464, E-mail:

Satoshi_Miyamoto@jetro.go.jp


Contact: Satoshi Miyamoto
Executive Director, JETRO NY
Tel: 212-997-0416
Fax: 212-997-0464
E-mail: Satoshi_Miyamoto@jetro.go.jp.



Focus is published and disseminated by JETRO New York, in coordination with KWR International, Inc., New York, NY 10023, Tel: 212-532-3005, Fax: 212-799-0517, E-mail:
. JETRO New York is registered as an agent of the Japan External Trade Organization, Tokyo, Japan and KWR International, Inc. is registered on behalf of JETRO New York. This material is filed with the Department of Justice where the required registration




The preceeding information is provided by:
KWR International, Inc.
New York, NY 10023
Phone: +1.212.532.3005
Fax: +1.212.799.0517
E-mail:


Website content © 2004 KWR International