Japan shipper ONE hedges against China risks with home-built vessels
TOKYO -- Japanese container shipper Ocean Network Express (ONE) unveiled a Japan-built ship on Tuesday, one of 15 vessels it plans to launch in the next two years as it looks to mitigate risks from ongoing U.S.-China tensions.
"We like to think we are an international company, truly a global international company," said CEO Jeremy Nixon at the christening of a ship at an Imabari Shipbuilding plant in Mihara, Hiroshima prefecture, on Tuesday. "I'm very pleased to say that this was the first set of ships that we built, which are owned by ONE."
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Japan Times
11 minutes ago
- Japan Times
Record demands from activist investors driving focus on governance, efficiency
Activist investors are inundating Japanese companies with an unprecedented number of proposals that will keep executives on their toes at annual general meetings (AGMs). Firms have received a record 137 requests from activists, according to data compiled by Mitsubishi UFJ Trust & Banking. The shareholders are delving deeper into management decisions and demanding changes to board structures and privatizations. The country's jammed AGM season matters more than ever this year as investors seek signs that Japanese stocks — which have underperformed most major markets this year — can get out of a rut. The proposals are putting added pressure on management to deliver tangible growth strategies, rather than simply turning to the quick fix of more buybacks or dividends. "With new activist holdings being revealed each day, companies are paying extra attention to governance and capital efficiency,' said Rieko Otsuka, a strategist at MCP Asset Management Japan. "There's a sense of impending crisis among management about when they might be targeted,' she said. The season peaks next week, with more than 40% of listed companies — that's over 1,700 firms — set to hold AGMs. They will be at venues including the luxury Palace Hotel near the emperor's residence and the Ariake Arena, which was built as a venue for the Tokyo 2020 Olympics. Some executives are readying for drawn-out meetings as overall proposals from activists and other shareholders have increased to almost 400, according to Mitsubishi UFJ Trust. That's well over double the number a decade ago. In contrast, in the United States, total proposals this year fell 14% through May 13 compared with the January-June period last year, as investor demand declined for environmental and social issue-related changes, according to a report from ISS-Corporate based on Russell 3000 index companies. Activist investors typically acquire a significant stake and then exert pressure on a firm to influence how it's run, suggesting that the increasing presence of these shareholders in Japan may be key to driving pro-growth strategies. The scrutiny in Japan is important right now because it may help carve out a path for corporate growth amid a worsening business climate as tariffs upend key sectors of the economy. Gains in Japanese stocks have been limited this year, raising the risk that the Topix Index's two-year rally is over. "We get to vote once a year, so it's important and I think — probably more than other cultures — voting against the president or the chairman sends a pretty clear message,' said Carl Vine, co-head of Asia-Pacific equities at M&G Investments, whose holdings include Toyota and Seven & I Holdings. Even so, proposals aimed at improving shareholder returns still make up a large chunk of activists' requests, and that may provide a short-term boost to the market as deep-pocketed companies pour more cash into buybacks. In addition, activist proposals rarely get passed because of opposition from domestic investors, who tend to be quite conservative. Still, the increase in proposals comes at an unfortunate time for executives who can no longer rely as much as on cross-shareholders. The waning influence of this cohort, also known as stable or policy shareholders, may increase the clout of institutional investors at proxy fights. This puts the focus more on companies with low approval ratings and "opens up the possibility that maybe a new shareholder would come in and try and put additional pressure on management,' said Bruce Kirk, chief Japan equity strategist at Goldman Sachs Japan. All this means that AGMs are now a far cry from how they were conducted before Japan's corporate reforms kicked in and the market caught the attention of overseas investors. "There was a time when decisions were made at AGMs in a planned, harmonious, and ritualistic manner, just for the sake of it,' said Hidenori Yoshikawa, chief consultant at Daiwa Institute of Research, a Tokyo-based think tank. "Now, until the meeting ends, we don't know how it will turn out.'
Japan Times
26 minutes ago
- Japan Times
Japan's exports drop raises recession risks as U.S. tariffs bite
Japan's exports fell for the first time in eight months as the U.S. tariff campaign weighed on global trade, raising the risk of a technical recession after the economy contracted at the start of the year. Exports measured by value dropped 1.7% in May from a year earlier led by cars, steel and mineral fuel, the Finance Ministry reported Wednesday. While the fall was smaller than the median analyst estimate of a 3.7% decline, data suggested exporters may be absorbing the tariff shock by cutting prices, as export volume rose 1.8%. Imports declined 7.7%, with crude oil and coal seeing some of the sharpest falls, leaving Japan's trade balance at a deficit of ¥637.6 billion ($4.4 billion). The shortfall widened from the previous month, and marked a second consecutive month of deficits. The drop in exports and the larger trade deficit add to concerns that Japan's economy could shrink again in the second quarter, pushing it into a technical recession. Domestic consumption has remained weak as inflation continues to outpace wage hikes. "We are seeing the impact of the tariffs — that's as expected,' said Taro Saito, the head of economic research at NLI Research Institute. "But what's surprising is that export volumes held up better than values, implying Japanese firms are cutting prices to remain competitive. That hits profitability, and it's hardly good news.' U.S. President Donald Trump has imposed a 25% tariff on imports of cars and auto parts, along with a baseline tax of 10% on all other Japanese goods. He also doubled a levy on steel and aluminum to 50% in early June. The levies will stay in place for now as Trump and Prime Minister Shigeru Ishiba failed to reach a deal on the sidelines of the Group of Seven (G7) leaders' summit after two months of bilateral negotiations. The 10% across-the-board tariff is set to revert to 24% on July 9, as previously announced in April. Car exports to the United States, which make up about a quarter of U.S.-bound shipments, declined 24.7% by value in May, but only 3.9% by volume — a sign that Japanese carmakers are slashing prices to maintain shipments. Overall exports to the U.S. fell 11.1% while imports slumped 13.5%, resulting in a trade surplus of ¥451.7 billion. Japan's trade surplus with the U.S. remains a focal point in Washington's efforts to rebalance trade. Meanwhile, Japan's exports to China fell 8.8% and those to Europe increased 4.9%. "The real question for Japan-U.S. talks is whether further levies can be avoided,' said Saito. "I expect the 10% across-the-board tariffs to remain, but if they return to 24%, the economic damage will be significant.' The yen averaged ¥143.97 against the dollar in May, 7.4% stronger than a year earlier, according to the Finance Ministry. A stronger yen tends to cut the value of dollar-denominated trade figures when converted into the Japanese currency. As uncertainty over tariffs lingers, the Bank of Japan (BOJ) kept its benchmark interest rate unchanged on Tuesday and slowed the pace for tapering its bond purchases from next year. It's "extremely uncertain' how global trade policies will affect economies and prices, the central bank said in its policy statement. BOJ Gov. Kazuo Ueda said at his post-decision news conference that while sentiment is worsening, hard data remains relatively solid, adding that he will watch the latter closely for future policy decisions. Wednesday's weak shipment figures are likely to be scrutinized by the BOJ. Failing to secure a deal at the G7 gathering, which Ishiba had called a milestone in the trade talks, bodes ill for the prime minister ahead of a national election likely to take place next month. Still, Ishiba may be able to win points with voters by asserting that it was better to protect Japan's national interests rather than rush into an unsatisfactory deal. Ishiba has already approved emergency measures to help households and businesses mitigate the tariff impact. But as inflation persists, he is considering cash handouts while opposition parties have urged a cut to the sales tax.
The Mainichi
27 minutes ago
- The Mainichi
PM Ishiba says Japan Inc. suffering under Trump tariffs
CALGARY, Canada (Kyodo) -- Japanese Prime Minister Shigeru Ishiba said Tuesday that U.S. tariffs are already severely impacting many Japanese firms, including automakers, but reiterated that he will not rush to reach a deal with Washington at the expense of undermining his nation's interests. Speaking at a press conference wrapping up his visit to Canada for the Group of Seven summit, Ishiba said the tariff measures targeting various sectors could have a "serious impact on the global economy both directly and indirectly." Ishiba made the remarks a day after he and Trump failed to agree on what the Japanese leader has called a "package deal" for the mutual benefit of the longtime allies. They ended their talks without having made tangible progress, with Ishiba saying hurdles remain. "We agreed to instruct ministers to continue with negotiations," Ishiba said. "We will never sacrifice our national interests just because we aim for a quick agreement." Bilateral negotiations have been held multiple times at the ministerial level, covering points such as boosting trade, addressing nontariff measures and expanding cooperation in economic security. After Monday's summit, the focus shifts to when the next in-person encounter may be. Ishiba said he plans to visit the Netherlands from June 24 to 26 to attend a NATO summit. Japan is not a NATO member but has been deepening ties with the military alliance, of which the United States is a member. The escalating conflict between Israel and Iran dominated the two-day G7 summit due to its ramifications for the wider Middle East region, home to major oil producers that supply Japan and many other nations. "We will continue to monitor how crude oil and gasoline prices move with a strong sense of urgency," Ishiba said. "I've already instructed officials to consider measures to prevent people's daily lives from being affected in preparation for the possibility that the confusion in the Middle East continues and prices of gasoline and oil products spike," he added.
