Tesla Japan plunges sharply

November 10, 2021 (Wednesday) Clear

・A wave of high prices is sweeping the world.

After nearly two years since the COVID-19 outbreak, major monetary easing measures are reaching a turning point, and the United States is beginning to wind down easing.

Some countries are moving to raise interest rates.

The focus is whether the price increases are temporary and due to supply constraints, or structural inflationary pressures.

Depending on policy, it could cool the economy. The world economy is at a difficult juncture.

・Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract semiconductor manufacturer, announced on the 9th that it will build a factory in Kumamoto Prefecture in collaboration with Sony Group <6758> [Closing price 13,850 yen], the first in Japan.

Initial capital expenditure is about $7 billion (about 800 billion yen), with Sony investing about $500 million (about 57 billion yen) in the joint venture that will operate the factory.

Mass production is planned to begin by the end of 2024. The construction site is planned to be adjacent to Sony’s factory in Kikuyō Town, Kumamoto Prefecture, and construction will begin in 2022.

・The ruling Liberal Democratic Party and Komeito on the 9th agreed at a meeting inside the Diet to provide 100,000 yen per child for those under 18 as a pillar of the economic measures.

500,000 yen in cash to be distributed within the year, with the remaining 500,000 yen to be provided as coupons for child-rearing related purposes around next spring, in principle.

Whether to impose income restrictions has not been decided, and discussions will continue.

（Nikkei 1 front page）

・Toshiba <6502> [Closing price 4,845 yen] began considering splitting the company into three by business segment.

Influenced by activist investors seeking to raise corporate value, large companies will fully split their businesses, each becoming a listed company in what would be Japan’s first such scheme.

The key is whether this can lead to a long-term increase in corporate value.

・General Electric (GE) on the 9th announced it will split the company into three divisions: aviation engines, medical devices, and power.

In 2023, medical devices will be spun off, and the power division in 2024. The main company will handle aviation engines.

Diversification could suppress corporate value by creating a conglomerate discount; the aim is to enhance business specialization to attract investment.

・Regarding the online sale of antigen test kits for COVID-19, a tug-of-war has formed involving the government and the medical community.

Following approval for sale at pharmacies in September, the Council on Regulatory Reform has urged further deregulation including online sales to prepare for the sixth wave of infections.

While there are advantages to immediate testing, the Ministry of Health, Labour and Welfare and the medical community remain cautious due to risks of infected individuals being misclassified as negative.

・Regarding the relaxation of border control measures for COVID-19 that the government began on the 8th, the complexity of the application procedures is acting as a barrier to use.

Six documents, including an application form and activity plan, must be submitted, and an inter-ministerial pre-screening system is in place, raising concerns about time consumption.

There are about 370,000 foreign nationals who cannot come to Japan, including technical interns and international students.

Currently, the key questions are when to expand the daily entry cap from 3,500 people.

This measure does not include tourists and remains a future issue for consideration.

・Fire insurance is expected to rise in real terms.

Major non-life insurers plan to abolish cheap 10-year contracts and shorten renewal cycles to every five years.

・Global automobile production is recovering.

Toyota <7203> [Closing price 1,995.0 yen] plans to reach a production scale of 1 million units in December, a new high, and

Honda <7267> [Closing price 3,295.0 yen] and General Motors (GM) of the United States are also shifting to increased production from the end of this year to January next year.

With the securing of semiconductors advancing and the spread of COVID-19 easing,

signs are emerging that the supply constraints on automobiles, which weighed on the global economy, are improving.

・Former Prime Minister Shinzo Abe of the Liberal Democratic Party, on the 11th, will become the head of the Koizumi faction (Seiwa Seisaku Kenkyukai).

Having the longest tenure as prime minister, Abe will return to the top of the party faction and engage in politics and policy.

He aims to maintain influence.

・The government on the 9th began considering wage increases for nurses and care workers.

Chronic staff shortages persist due to low wages and harsh working conditions.

Productivity improvements and the creation of autonomous systems are required.

・The government on the 9th held the Council on Economic and Fiscal Policy at the Prime Minister’s Office.

This was the first time the council has been held since the Kishida administration began.

Private sector members urged that the new economic measures to be announced on the 19th should be of sufficient scale and content to support the economy and strengthen growth potential.

・Cabinet Office, on the 9th, reported on October’s Economy Watchers’ Survey (the “Economy Watchers” street-level business climate).

The current condition index (DI) improving to 55.5, up 13.4 points from the previous month, shows two months of improvement, the highest since January 2014 (55.7) in 7 years and 9 months.

With the lifting of the state of emergency, sentiment has improved.

・Investors will select listed companies based on climate change responses.

From spring 2022, some companies listed on the Tokyo Stock Exchange will be effectively required to disclose climate risk information.

There is little understanding of these systems within companies, and competition for skilled professionals who handle such matters is intensifying in the background.

・Tokyo Shoko Research reported on the 9th that corporate bankruptcies in October fell 16% year-on-year to 525 cases.

The decrease marks five consecutive months of decline and is the lowest since 1964 for October, the lowest in 57 years.

For the first half of the year, 4-9 months also showed the fewest since 1964, continuing a historic low.

Government and financial institutions' COVID-19 countermeasures have helped restrain corporate bankruptcies.

・Hedge fund Blackstone and Apollo Global Management aim to reach $1 trillion in assets under management by 2026.

In addition to traditional private equity, they are rapidly expanding into assets of privately held companies, including debt and real estate.

Other major funds are also expanding their assets under management.

As the influence of investment funds grows, regulatory scrutiny by authorities is also increasing.

・There is a pause in U.S. rate hikes. The Federal Reserve has decided to begin tapering asset purchases, but is not rushing to raise rates.

The U.S. Treasury is reducing government debt issuance, tightening international supply and demand considerations.

If interest rates are kept in check, investments in risk assets such as stocks and commodities could be encouraged, but inflation remains high.

・The Ministry of Finance on the 9th reported that in October, overseas investors bought 2.557 trillion yen more in Japanese stocks and investment funds than they sold (monthly).

The net buying was the largest since October 2019, the second largest in two years.

However, some say overseas investors sold after late October, so its continued inflow into Japanese stocks remains in question.

・Bitcoin’s price hit an all-time high of $68,500 (about 7.7 million yen) on the 9th.

The U.S.-based CoinDesk reports other cryptocurrencies also surged, and the total market value of all cryptocurrencies surpassed $3 trillion for the first time since the start of the year.

Ethereum also set a new high on the 9th, rising 6.4 times from the end of last year. Solana surged 170 times.

・As of 4 PM on 11/9, global COVID-19 infection numbers (deaths) from Johns Hopkins University: World total 484,000 (6,707)

United States 125,338 (1,207) India 10,126 (332) Brazil 5,638 (126) United Kingdom 32,326 (57) Russia 38,257 (1,164) Turkey 27,824 (187)

France 2,241 (58) Iran 8,341 (140) Argentina 1,288 (39) Spain 6,417 (54) Colombia 1,917 (38) Germany 23,714 (168)

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