I am just getting a hold of some back print issues of the Nikkei Shimbun and in one of them there is a table of the top-20 firms by market cap. Since this is a very slow week in Tokyo, with trading only beginning today for a half-day session, I figured it might be nice to take a look at the blue chips and how they fared in '06.
Below you'll see a table similar to what was printed in the Nikkei, but I've added ADR tickers where appropriate (see note in italics in table) and I've converted the yen-denominated market caps into US$.
Click to enlarge table
Interesting findings:
- Toyota's dominance -- its market cap is more than #2 and #3 (both of which are mega banks) combined.
- As the Nikkei pointed out, notice NTT (NTT) surpassed NTT DoCoMo (DCM). A key issue for DoCoMo is number portability becoming available last fall and ever intensifying competition.
- Strength across in the board in the auto industry inc. Honda (HMC) +38% at #8, Nissan (NSANY) +19.9% at #10 and Denso (DNZOY.PK) +16% at #19.
- Nintendo jumped from #42 last year to #17 in '06 as its shares gained 116.2%, one of the biggest gainers among all Japanese stocks. Sony (SNE) is not that far away at #14 with about $6b separating them.
- Notice the underperformance of 2 of the 3 mega banks and Nomura (NMR).
- Notice the nice moves up by Japan Tobacco and Nippon Steel; both firms are key players amidst global consolidation.
Also, I want to share an extract from a Nikkei article:
Approximately 430 stocks, or more than 20% of Japan's publicly traded companies, traded at less than 1x price-to-book at year end 2006.
Hedge funds, PE and corporate investors are certainly aware of the situation. In the meantime, institutional and foreign investors continue to channel funds primarily into blue chips. It's hard to blame them considering the exchange rate, which I thought might hit ¥120/$1 today and the fact that blue chips have done so well, especially of late.
The biggest and best opportunities exist in the abundance of value plays, but these are the most difficult for a foreign individual investor to access. I would suggest using exchange traded funds. Yesterday I published a 2006 Year in Review and among the data I compiled, two funds from WisdomTree -- Small-Cap (DFJ) and High-Yielding Equity (DNL) -- dominated a field of 9 funds' returns. [Note: WisdomTree's ETFs launched in June.]
Disclosure: The author is not long/short any companies mentioned in this article/table.
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