Wednesday, November 13, 2013

Japan's Retail Securities Rebound in Equities in 2014

To my surprise last week during a meeting with the president of a Japanese securities firm in Tokyo, I heard news of strong profits in Japan. After asking about how good profits are in 2013 compared to last year 2012, I actually heard the follwoing phrase, "It is not a question of any percentage better than last year, it is multiples better! If things continue like this, 2013 may be the best result we have had in 20 years since the bubble!" I have heard about some firms benefiting from the "Abenomics" rebound, but I had no idea it meant full multiples of improved results for certain firms already.

I then had to ask why results were so good and his response made sense to me; "Generally, our retail clients have been growing as a percentage of active trading, but they have changed what they trade. Last year many retail clients were trading FX, but the Yen crosses have not been very volatile or predictable this year. Gold has been in a down trend for a while, and is difficult to short, JGB rates are not moving up in the short term, so that really only leaves 2 asset classes left; Japanese equities and residential real estate."

I also had the opportunity to ask a few more questions to gain additional insight:

Q. How do you see equity markets in 2014 and what are your hiring plans? 
A. To be honest, there are NO headcount limits on retail sales people at our firm. If there are motivated equity sales people with basic or in-pocket retail clients, we would like to hire as many as we can in 2014. 
Q. In addition to equity sales what else is active? 
A. Real estate. We are actively looking for deal makers who can connect buyers and sellers of land and residential buildings especially in central Tokyo.

Moreover according to this president, overseas real estate investors from Asia into Japan are now growing. There has been a clear trend to buy larger older homes with gardens of 1000-2000+ square meters or more (1/4-1/2 an acre). Occasionally there are even 2 older properties side by side, and investors construct convenience stores on the property instead of parking lots. As the Abenomics story grows, an exit by 2020 around the Tokyo Olympics can take place, and a full condo building can then be built on the spot if the location is central and close to a train station. If we can find real estate staff who speak Mandarin, then that is the sweet spot. There is big flow in that direction. It is not a well covered market though, and few real estate professionals have those language abilities to do those kinds of deals. 

The retail sales momentum is clearly now on and Bloomberg touched on it last week with a great story. It is a clear snapshot of a Nomura Securities retail sales person closing like the good old bubble days, can we be in store for more bubble days again?

See full Bloomberg story here.

To find your next Retail Sales career look here.

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

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