Two railway & brokerage stock bubbles in the Tokyo バブル 時代

 

The Sep '85 Plaza Accord which obligated major central banks to sell US$ and buy ¥ poured gas on the flames of speculation ignited by the Japanese base rate having been lowered from 9% in 1980 down to 5% in 1985 which was further curtailed to 3% after this agreement, causing corporates, individuals & banks to funnel a tidal wave of money( enlarged by warrants & convertibles issued in London) into speculation on stocks & land.

The meteoric rise in land prices engendered by this gold rush (tripling in the capital between 1983 to 1987) hoisted the stocks of major land-owning listed companies like Tokyu(above), lifting it from a '82 low of  ¥196 to  ¥500 just before the Plaza agreement to  ¥637 shortly after. This proved to be just the beginning as the price rose past ¥1,000 the next year & sailed over ¥2,000 the year after that. A concerted drive by gangsters in cahoots with major securities firm Nomura drove the price finally(but briefly) over ¥3,000, peaking just a fortnight before the Nikkei index. 

Hakone Tozan stock however, had already peaked several months earlier, slightly exceeding its late 1987 summit.

Nomura Securities, which in '87 topped the profits league ahead of Toyota & which made most of these on fixed, high commissions promoting stocks-du-jour like Tokyu to its corporate & individual clients, had already peaked at an astronomical ¥5,990 in the same year that it trumped Toyota, a long 44 months before Tokyu & the Nikkei itself. 

Its affiliate Sanyo Securities would famously go under days before another infamous Japanese broker Yamaichi, less than 8 years after the bubble burst. 

What's with the huge underperformance of Naim to Dayang?

Since early '22, the price of Naim, which holds 24.22% of Dayang has been diverging more & more from the price of the latter, with the widest gap seen in Feb '23 (70% points) & Nov '23(90% points). 

As of the morning of the last day of Jan '24, this gap has expanded beyond 80% with the latter rising 2% to $1.91 on news of an extension on a maintenance contract while the former is down over 1% with no news flow. My best guess is that the sellers are:

1) stale bulls from last year, dumping on likely disappointment of non-progress

2) remnant '18 rights subscribers who are raising cash for whatever reason

3)  insiders/short-sellers who have wind of a possible poor quarterly result to be announced(?)

There's also a total absence of sponsors who are usually needed to move the stock up by 5% or more on lack of leads.

However, from a strictly fundamental standpoint, its stake in Dayang itself is worth more than $1.05 per Naim share & that doesn't even factor in the locked-up treasury shares($1.08-$1.09 if they were subtracted), meaning that the co. is 'paying' investors 25 sen to own its net cash balance sheet loaded with properties & land at the current price. 

Historically though, the larger co. has outperformed the smaller one, especially during oil & gas booms(2013-2014) & speculative booms(2019) although the ratio of the Naim/Dayang price is approaching the all-time low of 0.378 should the one continue to rise & the other to stagnate.

As Dayang is likely to test $2.00 with a strongly uptrending chart, Naim has a better than 50/50 chance of revisiting the $1.00 mark it last saw in 2020.

 
 

The list of Tokyo paper gainers expands to twelve with in-&-out member Shindengen & new entrant Alps Alpine

 Dentsu +¥331 ↓

 Shindengen +¥130 ↑

Ogura +¥120 ↓

Nomura +¥163 ↑

Nihon ISK +¥382 ↑

Katsuragawa +¥268.5 ↑

Tomita E +¥194 ↓

Fujix +¥178 ↑

Nepon +¥145 ↓

Seikoh Giken +¥130 ↑

Hiyori +¥29.25 =

Alps Alpine +¥92 ↑

Stocks peak at different times within the bubble period (バブル 時代) 1985-1991

Daiso peaked in a Nov'87/Jul '88 double top while Kanto Denka Kogyo peak in Feb '84, well before the bubble had popped in earnest.

However, some small cap stocks(<100 mil shares issued) even peaked AFTER the Nikkei had declined by more than 20% in 1990:

Conversely, the largest city banks' share prices peaked by Apr '87, many having increased 10-fold(!) from 1983 levels as the market discounted improved earnings, which mostly doubled or more in the 3 years from '85-88:

2 of the largest long-term credit banks, the Industrial Bank of Japan(日本興業銀行), which in 1989 was the most valuable bank in the world, & the LTCB (長期信用銀行) proved the exception to the above, pipping their '87 peaks at about the same time as the Nikkei peaked at 38,957.44 at the juncture between 1989 & 1990:The former would eventually be so financially damaged by the bursting of the bubble that it was folded into a 3-way merger with two other crippled banks( one of which was Fuji, above) while the latter would collapse altogether less than a decade later, wiping out shareholders that included at least one American pension fund:

 

Despite the 2 consecutive day drop, the blue-chip Japanese stock index comes within throwing distance of its 38,957.44 record!

 

My magnificent paper gainer TEN retain their gains despite the correction, bringing 2 million of invested capital into recouping territory without a loss!

Only 2,410.49 Nikkei points left to revisit the Record I predicted with 62% Probability !

 

Today, all my portfolio paper gainers in Tokyo retained their surpluses with Nomura racing ahead to a fresh 6-year HIGH & the total gainers expanding to a perfect TEN thanks to Shindengen Industries [¥ 3,180 v  ¥ 3,040 entry ].At this rate of ascent, the fresh all-time high, 34 years in the making, could come before the Lunar New Year celebrations, though I predict some back-and-forth-ing in the interim.

Japan's corporate bankruptcies anticipated to rise 20% when interest rates lift from non-zero levels

 

Knusford on the verge of breaking $1...and the Nikkei briefly touches 36,008.23 !

 

Does the same chart pattern as Daiwa Heavy months ago foreshadow a similar move in Knusford?

 The former moved from the above consolidation pattern @  ¥ 770 - ¥ 855 to a lofty apex of ¥2,010 within 3 weeks of the breakout!

Two highly UNDERVALUED stocks I'm heavily invested in & their bullish price action on a normally down Friday!

 

Less than 4,000 Nikkei points to go to FULFIL my 7-month-old prediction!

 

My portfolio paper gainers are:

Dentsu Group : purchased @  ¥ 3,626 Dec 27 2023

Nomura Holdings : purchased @  ¥ 659.5,¥ 524.6  Feb 6 & Jul 27 2018

Ogura Clutch : purchased @  ¥ 3,230  Sep 13 2023

Fujix : purchased @  ¥ 1,597  Nov 15 2023

Nihon ISK : purchased @  ¥ 1,277  Nov 17 2023

Seikoh Giken : purchased @  ¥ 1,318  Nov 2 2023

Tomita Electric : purchased @  ¥ 1,308  Dec 12 2023

Katsuragawa E: re-purchased(x2) @  ¥ 568.5  Apr 7 2023

Nichiwa Sangyo : purchased @  ¥ 251.75  Jul 13 2023

Those which are above my entry but not sufficiently to cover the exorbitant buy & sell commissions are : Alps Alpine, Aida Eng, Katakura, Shindengen Industries & Yumemitsuketai.

They are over & above the 23 earned on in 2023 [ SAXA, Imasen, Komori, Aida, Suruga Bank, Shikibo, Okasan, Toyo Sugar, Tokyo Tatemono, OKI Electric, Hayashikane Sangyo, First Baking, Mitsubishi Estate, Daiwa Heavy, The Tottori Bank, Mizuho Banking, Japan Post Holdings, Nitchitsu, Teraoka Seisakusho, Katsuragawa, Chuo Build, Nomura & Nippon Paint ] plus the 30 earned on from Jul 30 2017 till Dec 31 2022