Over the past two years Barclays Capital has doubled its Japanese equity business staffing to 290 persons.
The Japanese equity story is essentially the story of Asian regional economic growth.
Credit Suisse Securities is planning over the next two years to increase Japanese equity analyst staffing by over 40 percent, to a level equivalent to that before the 2008 crisis.
It is important to know that when Wood was Tokio bureau chief of the Economist in the early 1990s, he astutely predicted the pending collapse of the Japanese equity market.
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During the past 18 months Goldman Sachs has expanded its Japanese economics and equity research team by 20 percent to some 80 persons.
In the 1980s Japanese companies raised cheap equity-linked debt to build lots of factories, shops and so forth in the expectation that the economy would continue to grow at a fair clip.
Before the downturn, Japanese companies' return on equity averaged around 10%, about half the level of American firms.
At Japanese firms the return on equity is typically half to two-thirds of that at American and European ones.
Although Goldman Sachs predicts that Japanese companies' average return on equity may quadruple to 8% over the next two years, this is still far below the 30% return on equity that American companies are expected to achieve this year.
It stripped credit risk out of their portfolio, reduced equity and bought 30 year Japanese bonds paying 2.6 percent.
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It may yet produce some fireworks on bonuses, but not on any of the deeper issues: a forced wave of equity-raising by European and Japanese firms is highly unlikely.
Relatively low profitability has not often prevented major Japanese firms from attracting capital, either debt or equity.
Behind the hiring is increased optimism toward the Japanese market and consequent demand for buy-side equity research from overseas institutional investors.
Yamada Denki's return on equity of 12% is high by Japanese standards, and Gray thinks that the company can deliver earnings growth of 20% a year, even if the Japanese economy doesn't recover soon.
UBS's global equity derivatives department sell so many options on Japanese banks' shares?
This month Nikko announced it was reserving 10% of its shareholders' equity for a new division to invest in Japanese start-ups.
Another is Privee Zurich Turnaround Group, a private-equity fund which despite its name is thoroughly Japanese, and which has also flirted with hostile bids.
That will force Japanese companies to be a lot more conscious about return on equity and share prices, which will bring them back to what capitalism is all about.
Stack's sobering perspectives force investors to consider the unpleasant possibility that U.S. equity markets are doomed to follow the lead of Japanese stocks caught in the funk of a 13-year bear market.
As part of the deal eBay will assume equity interests in U.K. shopping club SecretSales.com and Japanese language site brands4friends.jp.
Meanwhile, there is another product, the db X-trackers MSCI Japan Hedged Equity ETF (DBJP), which hedges perhaps the most globally recognized Japanese index from MSCI that investors have hardly even noticed.
Japanese firms are deeply indebted by the standards of other countries, with an average debt-equity ratio of 4:1.
Equity flows from the Eurozone and the U.K. are behind the move, while Japanese and other flows have remained flat.
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