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Banking

Nikkei heads for 24,000 by 2010… or sooner

Even after the stock market’s dramatic climb in 2005 and sudden sell-off in mid-January, a wall of money is heading into Japanese equities, reports Peter Lee. Securing greater retail investment is seen as crucial to the reconstruction of Japan’s entire financial system. Privatization, new-economy IPOs, J-Reits and private equity exits will keep the investment bankers busy until the big blue chips are ready to issue once more. In the meantime, can someone please fix the TSE’s problems?

Japan emerges from the shadows | A new generation embraces M&A | Debt is not a dirty word | Funds get activist in JapanLiving in the past; paying with the future

WOULD YOU BUY shares in a Japanese bank? It might already be too late. In October 2005, Mizuho Group launched a ¥531.6 billion ($4.6 billion) secondary equity offering. It was the biggest new equity issue in Japan since 2002 and the largest ever in the banking sector.

Although the recovery in Japanese bank share prices from their lows was already far advanced by the time the deal was announced last August – Mizuho’s stock sank to a low of ¥58,300 in April 2003, recovered to ¥448,000 one year later, hit ¥507,000 at the end of March 2005 and rallied 30% after the announcement of the deal to stand at ¥722,000 at the end of September 2005 – the rationale for it provided a stark reminder of the troubled recent history of Japanese banks.

Its proceeds were intended to fund the repurchase and cancellation of ¥250 billion of preferred stock remaining from the injection of public funds into the banks to rescue them from the bad-loan problem of the 1990s.

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