The 2010 All-Japan Research Team: Investing in Japan, Profiting from Asia
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The 2010 All-Japan Research Team: Investing in Japan, Profiting from Asia


Investors say Japan’s best analysts are the ones tuned in to Asia's burgeoning markets.

As Japan struggles to find its footing in the postcrisis financial landscape — consumer spending rose for four straight months, through February, but deflation remains a serious concern and many economists worry that a double­-dip recession is imminent — the country’s equity analysts are looking with hopeful eyes to Asia, particularly China, to rescue the export-­driven economy from further deterioration. “Japan is shrinking — you can’t just stay at home,” says Nobuyuki ­Takagi, Tokyo-based director of Japanese equity research at Nomura Securities Co.

Damien Horth, who in January was named head of Japanese equity research at UBS in Tokyo, says that he sees “terrific opportunities” for Japanese companies that are deepening their connections to Asia and finding a market there for their products.

With so much uncertainty looming over Japan’s economy, investors value guidance that not only alerts them to potential problems but also informs them of opportunities to be found by investing in Japanese companies that have made significant inroads into Asia’s dynamic markets. The analysts who do the best job at providing this type of research can be found at Daiwa Securities Group and Nomura, which share top honors on the 2010 All-­Japan Research Team, Institutional Investor’s 17th ­annual ranking of the nation’s top equity ­analysts.

[Click here to see the complete rankings of the 2010 All-Japan Resarch Team]

Daiwa repeats in the No. 1 spot, with 24 team positions — the same number as in 2009 — while Nomura adds six positions to the 18 it won last year, when it finished in second place. UBS holds steady in third place despite picking up four positions, for a total of 21. The biggest gainer is Mitsu­bishi UFJ Securities Co., which vaults from seventh place to fourth after adding three positions, for a total of 16.

At first glance it appears that UBS is the lone exception to investors’ preference for local firms over global banks, but looks can be deceiving. Horth notes that all 34 of the Swiss bank’s analysts in Tokyo are Japanese. “We’ve got ten senior guys here with huge experience — the average is 17 years in the business, and many have been in research for more than 20 years,” he says. That experience pays off: UBS wins more first-place positions — ten — than any other firm.

Despite Japan’s economic malaise, many firms have resisted the temptation to reduce their research department head counts and scale back stock coverage in response to the crisis, as banks have done in other parts of the world, notably Europe and the U.S. Nomura’s 66 analysts, for example, follow 587 Japanese companies, up from 581 at this time last year, Takagi says.

Masatoshi Makino, who became Daiwa’s director of equity research last August, says his 51 analysts track about 330 companies, the same as one year ago. And Mitsu­bishi UFJ is expanding: The firm just added two analysts (for a total of 34)to cover the Autos and Auto Parts sectors, according to Takashi Ueno, general manager of Mitsu­bishi UFJ’s equity research ­division.

Ueno expects his team to increase the number of stocks it covers from 416 to 431 over the next few months. He makes no secret as to why: “Our goal is to catch up with Nomura,” he says.


“The opportunity for Japanʼs economy to break out of the protracted stagnation of the so-called ‘thirty lost years’ has finally arrived,” says Mitsubishi UFJ’s Hironori Kamezawa.
Amid a surge in trading, J.P. Morgan Chase took second place in the ranking, followed by Goldman Sachs in third.
Bridging the gap between what the buy-side and their corporate counterparts value each year is a delicate balance.
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