slide1 n.
Skip this Video
Loading SlideShow in 5 Seconds..
世界金融危機と日本 チャンスと課題 PowerPoint Presentation
Download Presentation
世界金融危機と日本 チャンスと課題

Loading in 2 Seconds...

play fullscreen
1 / 36

世界金融危機と日本 チャンスと課題 - PowerPoint PPT Presentation

  • Uploaded on

世界金融危機と日本 チャンスと課題. 慶応義塾大学 2009年1月10日 白井早由里. Structure of Presentation. Part 1. State of Financial and Capital Markets Before the Subprime Loan Crisis. Foreign Stocks Held by US Investors. As of end-2007. Source: Prepared based on US Treasury data. US Stocks Held By Foreign Investors.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about '世界金融危機と日本 チャンスと課題' - niveditha

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript





foreign stocks held by us investors
Foreign Stocks Held by US Investors

As of end-2007

Source: Prepared based on US Treasury data.

us securities held by foreign investors by type of securities and originating country
US Securities Held By Foreign Investorsby Type of Securities and Originating Country

As of June 2007(Billions $)


Growing Foreign Reserves in East Asia

(% World Foreign Reserves)

cross border banking activities june 2008
Cross-Border Banking Activities (June 2008)

(Billions of US Dollars)

Source: Prepared Based on BIS data.

us and asia s foreign asset composition
US and Asia’s Foreign Asset Composition

As of 2007

Source: Prepared Based on CEIC and US Gov. data.

summary and additional points in part i
Summary and Additional Points in Part I
  • US investment in foreign stocks was active and large
    • Europe > Asia > Latin America
  • US investment in foreign stocks was greater than foreign investment in US stocks
    • Europe: 2484 vs 1594, Asia: 1182 vs 560 ($ billions)
  • US government, agency, and firms were able to issue a large amount of LT bonds in US dollar
    • US creditors faced a limited degree of currency mismatch
  • US actively invested in foreign LT bonds issued in Cayman Islands (24%), UK (19%), and Australia (4%); and largely in US dollar
    • A decline in US investment would lead to the shortage of US dollars
    • US investors faced a limited degree of exchange rate risk

US was risk-taker (investing actively in foreign stock markets, while raising funds internationally through bond markets)

  • Europe was risk-taker (investing actively in US stocks, corporate bonds, ABS, CDO, etc.)
  • Asia was risk-averse (investing actively in US treasury securities and agency bonds)
  • Foreign ownerships of domestic stocks were large in many countries (% of total domestic stocks): 30% (Japan), 40% (Korea)  11% (US)
  • Cross-border banking activities were undertaken largely by US and European banks
  • UK banks played the most important intermediary role in terms of circulating bank money (mainly through accepting foreign deposits and investing in foreign deposits)
  • Japanese banks were most active among Asian banks, but their activities were largely concentrated on the asset side
write offs by major financial institutions have concentrated in us and europe
Write-offs by Major Financial Institutions Have Concentrated in US and Europe

As of October 2008

(Billions of US dollars)

as a result
Asa Result,
  • A decline in US investment abroad has occurred mainly through cross-border banking activities
    • A reduction in foreign bank loans and bank deposits by US banks
    • Also, a reduction in foreign bank deposits by US firms
    • Adversely affected other countries’ banking activities (e.g. Korea)
  • A decline in foreign investment in US has also emerged mainly through cross-border banking activities
    • Cuts in bank loans to US banks and firms, as well as bank deposits
    • Adversely affected credit availability and real economy in US

※ Cross-border banking activities have dropped significantly on the global level

us investment abroad millions
US Investment Abroad ($ Millions)

※Minus indicates net outflows

※Minus indicates net outflows

Source: Prepared based on IMF data

foreign investment in us millions
Foreign Investment in US ($ Millions)

※Plus indicates net inflows

※Plus indicates net inflows

limited exposure of japanese banks to structured credit products
Limited Exposure of Japanese Banks to Structured Credit Products

As of June 2008

(Billion US dollars)

Source: Prepared based on the Financial Services Agency data.

factors contributing to limited direct damages in japan
Factors Contributing to Limited Direct Damages in Japan
  • Small Banks’ Losses (caused directly by subprime loan crisis)
    • No removal of firewalls among banking, securities, and insurance
    • Cautious behavior (lessons from the banking crisis in the 1990s)
    • Dominant commercial banking  Growing investment banking in US
    • Heavy reliance on deposits  increasing wholesale finance in US and Europe
    • Earlier acceptance of Basel II (from end-2006) than US and Europe
  • Non-Existence of Serious Real Estate Bubbles in Japan
  • Greater Scale of Real Estate Bubbles in US (90% increase) in 2000-07 than Japan (50% increase) in 1985-90
    • Small Household Debt Problems

=> Low Household Debt/GDP Ratios: Japan 70%  100% (US), 100% (UK), 110% (Australia)

  • Limited Cross-Border Liabilities by Banks ($ billion, Sep. 07):

660 (Japan)  6,943 (UK), 3,554 (US), 2,644 (France), 2,013 (Germany)

※ Greater Cross-Border Assets by Banks: 2,217 (Japan) 6,567 (UK), 2,852 (US), 3,920 (Germany)


As a result (until the Lehman Shock),

  • Continued Positive Credit Growth by Japanese banks (no severe credit crunch)
  • Relatively stable interbank market => low 3monthTIBOR/FB spread (about 0.5%), but higher dollar-denominated rates for foreign affiliates
  • Mild increase in corporate bond spreads (0.4% => 0.8%) due to strong financial positions of non-financial firms and ample liquidity
    • Increase in cross-border M&A
  • High Capital Adequacy Ratio (as of September 2008)

Mizuho (11.5%), Mitsubishi-UFJ (10.7%), Mitsui-Sumitomo (12.5%)

growing issues
Growing Issues
  • Sharp Stock Price Drop (withdrawals by investment trusts and foreign investors, declined corporate profits due to sluggish growth)
    • Gov. action: abolition of naked short selling, change in the current value accounting, extension of low capital gain and dividend taxes, capital injection scheme, and purchase of banks’ stocks by Banks Shareholdings Purchase Corp.)
  • Tightening of banks’ lending behavior (especially against SMEs)
    • Increase in the number of bankruptcy (construction, real estate)
    • Reflecting declining profits (after high growth period of 2002-07)

(Gov. action: reduced policy rates, increased credit guarantees and policy loans)

  • Yen’s Appreciation (25%, rewinding of yen carry trade and global demand for yen as a safe currency)
  • Declining Export Growth
    • Japan’s trade deficits in August, October and November 2008
stock price index 2000 m1 100
Stock Price Index (2000 M1=100)

※Foreigner’s Share before Sep. 08: Korea (30%), Japan (about 30%),

Taiwan (32%), Thailand (31%), Indonesia (21%)

Source: Prepared based on CEIC.

movements of exchange rates
Movements of Exchange Rates

2007 M1=100


Source: Prepared based on CEIC.

shares of exports to us and eu total exports
Shares of Exports to US and EU(% Total Exports)







US Market

EU Market







chances and challenges faced by japan and east asia
Chances and Challenges Faced By Japan and East Asia

(1)Japan and Asia needs to develop a greater internal market for final goods

  • Promoting more self-complete trade integration through an increase in domestic demand

(2) Japan and Asia need to circulate money within Asia:

  • Heavy dependence on US dollar and US (and EU) risk-taking money

※Need to develop international financial centers in Asia

※Japanese banks should increase cross-border banking activities

(3) Japan should more actively engage in cross-border and domestic M&A

  • Large reserves, good balance sheets, low global stock prices, withdrawal of M&A by foreign investment funds and foreign firms)

(4) Japan and Asia need to develop risk-free liquid assets (alternative to US treasury bills)

  • Promoting the use of JGBs abroad as reserve assets
  • Greater efforts to develop Asian bond markets (e.g., currency basket)
growing east asia s intra regional trade
Growing East Asia’s Intra-Regional Trade





Source: IMF, Direction of Trade Database.


Challenge 3: Relatively Limited Outward FDI (¥100 Millions)

※Minus indicates net outflows

Source: MOF.

challenge 4 need to increase demand for debt securities held by non residents
Challenge 4: Need to Increase Demand for Debt Securities Held by Non-residents (%)


Source: ADB