Co-Sponsors:
As co-sponsors, Mizuho Corporate Bank, Japan, and Saudi
Hollandi Bank played an active role for the success of
the symposium. Mizuho group Corporate Bank is the
largest investment bank in Japan formed by the merger of
three major Japanese Banks.
Participants:
The symposium was attended by senior officials of
Capital Market Authority, officials from SAMA, senor
executives from Banks and other financial institutions,
Saudi and Japanese business executives, academics, and
students.
There were around 700 participants which was 200 more
than our original expectation PSU provided additional
facilities to accommodate the participants who could not
be accommodated in the auditorium.
Speakers:
Mr.Hajime Takata, Chief Strategist, Mizuho Securities
Co. Ltd, Japan, and most popular speaker on stock market
in Japan delivered his lecture on: Events Since Japanese
Bubble Burst and Implications for Capital Markets.
Mr.Yuichi Chiguchi, Chief Fund Manager, DLIBJ Asset
Management Co.Ltd, Japan, spoke on the Japanese Stock
Market Outlook.
Mr. Mohammed Al Shemrani, Board Member, Capital Market
Authority spoke on the Saudi Stock Market Situation.
Facilitator:
Renowned speaker Dr. Abdul Rahman Al Homied, member of
the Board of Trusties of PSU acted as the Facilitator.
Question and answer session:
The question and answer session was very active with
many pertinent questions for which the speakers answered
most appropriately.
Mr.Hajime Takata explained the most painful process
through which the Japanese economy passed after World
War 2 .The Japanese bubble burst after reaching its peak
in 1990.The loss of national wealth was to such an
extent that it exceeded the financial loss incurred in
the World War-2 .The loss of national wealth during the
period of the bursting of the bubble was JPY 645
trillion whereas the loss of national wealth at the time
of World War-2 was JPY 64.2 billion.
The structural problem in Japan was associated with real
estate problem with a loss of JPY 1000 trillion. This
was a magnitude unimaginable at the beginning of 1990s.
The exit from the pessimistic bubble was difficult.
Support from the government and the central bank changed
the mindset of Japanese pessimistic bubble.
The factors that led to the subsequent recovery include:
1. Improvement in the corporate profitability by making
use of technological competitive advantages.
2. Corporate governance with a focus on shareholder and
large scale mergers and acquisitions (M&A)
3. Cultivation of domestic investors
4. Flow of investment funds from overseas.
5. Favorable domestic and overseas macro financial
conditions.
6. Support from the government and central bank
Mr. Takata also explained about the trend towards global
convergence of equity markets. He emphasized the
intensifying correlation of worldwide stock markets.
This result in global convergence in valuations.
A factor that helped recovery of Japanese equity market
is the world wide surplus liquidity. Short term
fluctuations could occur but the basic trend is for
extension of liquid markets (until about 2010)
Lessons for Saudi Market:
Proportion of Saudi equity capitalization in the
worldwide stock market is 0.6 %. U.SA stands first with
38.6% and Japan comes second with 9.1%.Decline in
Japanese stock market had a significant effect on the
world economy but the decline in Saudi market had only a
local impact. Saudi market declined after reaching its
peak in February 2006.Overall Saudi economy did not
respond in the same manner to the decline in the market
due to surging oil revenues.
Key to market invigoration:
1. Getting clear picture for future corporate
business model.
2. Gaining confidence of overseas investors
3. Increased role of domestic institutional investors
4. Attracting investment funds from overseas by opening
up the market
5. Educating the public about equity investments
6. Support from the government and the central bank (SAMA).
Mr. Yuichi Chiguchi Spoke about Japan’s equity market
outlook and investment strategy. He pointed out that in
the next 18 months; it is Japan’s turn to lead global
equity markets.
Global Hard Tech recovery is benefiting Japan more than
any other country. Japan has longer term competitive
edge in the global high tech market. This recovery is
free from global warming issues as Hard Tech does not
involve environmental issues as in other manufacturing
recovery.
Japan’s equity market is likely to outperform the US
market.
Boom in the mergers and acquisition activities also
resulted in improved equity market out look.
Japans macro and micro fundamentals are now greater than
US macro and micro fundamentals. 2007 out look for Japan
in the real GDP growth rate and Corporate profit growth
is higher that the US. Japan’s construction machinery
industry is enjoying high growth due to social
infrastructure growth in Asia.
The main reasons for attractiveness of Japanese market
for investors.
1. Japanese equity market has more room for upside than
other areas in the world.
2. The longer term growth process has just started.
3. Excess corporate liquidity world wide
4. Structural changes in Japan has pushed the M& A
activities bringing in more overseas investments.
Mr. Mohammed Al Shemrani discussed about the development
of capital markets in Saudi Arabia and touched upon the
present situation.
Conclusion:
The visiting speakers feel that there is a need for
increased investor education, opening up of Saudi
markets for foreign investors and more active support
from government and SAMA. |
