On Thursday January 23, 2014 at the Tokyo American Club, an interesting Economic Seminar was held to explain a Japan Investment outlook. It was presented by the CIO of BlackRock Japan, Shinichi Kawano, in English. It was a packed house with a mix of foreign and Japanese in the audience. I know that many others wanted to attend, and it seems like the kind of Japanese "Abenomics" topic that many of our readers may find worthwhile in possible insight.
Two of the most interesting takes were about the kinds of industries that seem the least efficient compared to US comparisons. They seem to have the most potential to improve; ICT or the maximizing of Information, Communication & Technology are the ways that this can be done best. When looking at Japan basic manufacturing is already running smoothly as is construction but other industries less so.
If you used 100 as a goal in compared efficiency in the US, the following Japan sectors seem to have the biggest gap and ability to improv;e;Food & Accommodation just 26.8%, Wholesale/Retail 42.9%, Transportation/Warehousing 45.7%, Electricity, Gas and Water supply services 53.5%, and finally Electrical Equipment 58.6. Clearly there are a lot of equity names in these sectors than can still grow a lot in Japanese price value. An expectation of 18,000 for the Nikkei seems possible by Dec 2014, a very bullish outer limit.
ICT was interesting from a personal comment as I recently heard from a Japanese prop trader in Tokyo, working at a top 5 Japanese securities firm. He asked to use Evernote and Dropbox for sharing research notes with his team, but his firm's management would "not allow it" full stop. He was asked instead to cut and paste (as in glue and scissors) news "paper" articles into a book to be kept in the office. His direct manager said ignore this "out of touch" answer and he now uses these cloud based tools anyway, but sadly, upper management do not officially encourage it. Maybe in time they will.
This is the kind of ICT example that I think Shinichi Kawano is looking for, and I can confirm is out there. It is very insightful and agree that technology and cloud based tools are certainly a key factor holding parts of corporate Japan back even now. The cloud is here, even in Japan, and cannot be stopped. Next stop 18,000 Nikkei based on this "cloud boost" perhaps!