Major net brokers are likely to post declined profits
Japan’s four major internet securities companies are expected to report lower profits for the fiscal year ended March 2017, due largely to an uncertain global political environment that has pared down trading by retail investors.
Matsui Securities’ nonconsolidated net profit is seen at about JPY 11 billion($101 million), down 25% from the previous year, while Kabu.com Securities’ net profit is estimated at JPY 6.5 billion, a 19% decrease. Both companies were likely hurt by a downturn in stock brokerage commissions from trading by individuals. Monex Group’s consolidated net profit, based on international accounting standards, seems to have dropped 86% to around JPY 500 yen. Earnings were weighed down in part by increased costs from renovations of its core system. SBI Securities’ earnings remained solid, with its group net profit apparently falling only slightly to about JPY 28 billion. Operating revenue excluding financial revenue likely hit a record. Revenue from foreign exchange margin trading commissions evidently rose and its corporate division performed well, thanks to underwriting initial public offerings.
Online brokerages have used low commission fees to boost market share and now control about 90% of trading done by individuals in Japan. Their earnings are thus greatly impacted by individuals’ enthusiasm for buying and selling stocks.But trading by retail investors has decreased every year since its fiscal 2013 peak, when hopes grew for Prime Minister Shinzo Abe’s economic policies, including deregulation. Stock trading by individuals shrank 16% in fiscal 2016, based on data from the Tokyo Stock Exchange.
Japan’ｓworking-age population faces a sharp decline.
Japan’s working-age population is facing a steep decline, leaving the country’s future vitality precarious barring major improvements in social security and labor productivity. The National Institute of Population and Social Security Research published new statistics on Japan’s population on April 10th, showing projected levels for each of the 50 years from 2015 to 2065. The working-age population, ages 15 to 64, is to plunge 40% from 2015 levels by 2065. The figure probably will drop to 59.78 million around 2040, undershooting the current count by more than 20%.
In such sectors as construction, transportation and nursing care, open positions already outnumber applicants by more than three to one. Industries that require lots of labor may not be able to sustain themselves if the population keeps shrinking at this rate, and urgently need advances in productivity or technological innovation.
Nursing care has seen progress in information technology and robotics, but the labor force numbers probably will fail to keep pace with demand nonetheless as the population ages. Some logistics industry players have adjusted their strategies to address the labor squeeze, such as by discontinuing home delivery scheduling services. But unless package volume decreases, they will have a hard time maintaining their present level of service.
Japan’s city gas retail market is liberalized.
On April 1st, Japan freed the city gas retail market. All consumers, including households ad shops, are able to choose a gas provider and its service plan from a variety of options. It allowed major electric power companies to enter the market and enhance competition with gas company rivals in the industry. Actually competition is expected in the Kansai region, but not in the Tokyo metropolitan area. And the consumers planning to change the provider represented only less than 1% of total consumers.
Official land prices as of January 1st 2017 rise.
On March 21st, the Ministry of Land, Infrastructure, Transport and Tourism (”MLIT”) announced the official land prices as of January 1st 2017. The data points 0.4% increase in nationwide price fluctuation average which has resulted in 2 year consecutive increase. The trend shows that openings of new hotels and stores are active in response to the increase in incoming foreign visitors and it has brought to result in two consecutive years rise in the commercial areas. Another trend shows that the residential areas has turn to show a flat status escaping from the nine years consecutive falls thanks to the government support policy such as tax reduction for home loans. In Tokyo, the rate of the rising prices has increased for 4 consecutive years in the residential, commercial and industrial areas and the same result has been also made for the average of all areas. The commercial areas in Tokyo has shown the 2nd largest price increase by prefectural comparison, followed by the same areas in Osaka, and prices of residential areas also have continued a steady increase.
Japanese major automakers’ results for FYE March 2016
The financial results of seven Japanese automakers for the fiscal year ended March 2016 are attached herewith. Most of the figures are taken from the annual securities report, or Yuka Shoken Hokokusho, of each automaker.