Monday, September 9, 2013

Tokyo 2020: The REAL TRADES (Under Construction)

The Tokyo Olympic bid for 2020 is clear and the first relief rally in is now play. The early days of this week and next week will see many investors "chasing stocks" that will benefit, but the smart money will be selling the winners on the news to the maximize P/L in a price exit. Nomura, MUFJ, Daiwa and others have all sent out research on the major stocks that had a winning bid priced in. This blog post will not explain this but instead explain the local story right here on the ground in Tokyo and other parts of Japan.

If you walked around Tokyo yesterday a number of retail firms were offering special lunch sets for 2020 yen. That is twice the usual lunch price, so it is either A) a special for 2 people, or B) a luxury high end offering. This was observed at sushi restaurants, ice cream parlors, coffee, juice and crepe establishments. One retailer in Akihabara offered summer fans (for cooling) on sale for just 2020 yen, down from the retail price of 3500 yen. 

The consumer sector in many retail areas may be able to benefit from this new "special price point". It could bring a new bump in sales traffic that may surprise many who have been expecting retail sales declines. Trends end and the smart money gets ready for it early.

If you were anywhere near a TV in Japan yesterday, all day long, from the national broadcaster NHK to small cable news services, the Tokyo bid was covered all day. In all parts of Japan at 5:20am local time, various video scenes were replayed over and over. This was not just Tokyo, but across Japan. Many citizens woke early in the morning to celebrate. The follow up story was the price specials at 2020 yen. As the first wave learn a second wave will follow, retail sales may really surprise.

Many stories have covered the real estate increases from new offices expanding in Japan, mostly in Tokyo. Many other stories have also focused on the construction boom from the Olympic contracts. What else is being overlooked? The answer is a new wave of internationalization plus sports & health. 

The amount of English lessons that will be pursued by a new generation will to need to service a wave of visitors that cannot be achieved overnight. Hotels, restaurants, and retail service staff will all start learning more English, conversation schools also known as "eikaiwa" including ECC, Aeon, GABA, CoCo, and Berlitz (Benesse group) may all be possible IPO plays in the small cap space if things mushroom.

Many news stories yesterday focused on the prestige of being a torch carrier for the Olympic flame. The Japanese do not prepare lightly, and many joggers mentioned that a big motivation for them was to run hard and get a chance to hold the flame. Mizuno and a variety of other sports retailers will all benefit from the health and fitness boom that could be on the way in the years to come. 

For more Buy-Side and Sell-Side roles in Asia-Pacific, contact our TMJ Partners Japan & Asia Finance team.

Tokyo                                                              Tokyo
          Mark Pink                                                       Shinichi Nagasawa

No comments:

Post a Comment