This page has been archived and commenting is disabled.

"Ms. Wantanabe" Bets On Resurgent Yen As PE Cashes Out

Tyler Durden's picture




 

Make no mistake, we have had our fair share of laughs at the expense of China’s equity mania, with the millions of new trading accounts opened by semi-literate housewives and security guards-turned day traders serving as the anchor for many an amusing post. 

But as it turns out, China isn’t the only place where housewives are keen to express their view on financial markets because as you can see from the below, ‘Ms. Watanabe’ is positioning for a stronger yen even as Mr. Kuroda plunges Japan further into the largest ponzi scheme in the history of mankind in an effort to stoke hyperinflation to 'rescue' the country from a decades-long battle with deflation.

Via Nikkei:

Japanese day traders, colloquially and collectively known as "Mrs Watanabe", are buying the yen as it nears eight-year lows, suspecting that policymakers would be reluctant to let the currency fall further as it would provoke criticism at home and abroad.

 

Last week, net dollar buying positions on the Tokyo Financial Exchange, Japan's largest margin trading platform, had fallen almost 60 percent from a high hit in January, to stand among the lowest levels seen in the past year.

 

At Gaitame.com, another platform popular among margin FX traders, traders have even gone long in yen for the first time since late 2012, when Prime Minister Shinzo Abe was voted into power promising to reflate the economy through massive monetary stimulus, said Takuya Kanda, senior researcher at Gaitame.com Research…

So far at least, it looks like Japanese housewives may be getting squeezed because the JPY just hit an eight-year low against the dollar...

...but 'Ms. Watanabe' is a contrarian soul and apparently won't be deterred...

Last week, the dollar finally broke out of its long-held, tight range between 119 and 121, edging up near the eight-year high of 122.04 yen touched in March.

 

Given the breakout, the dollar/yen's technical outlook is bullish, usually a good time for day traders to buy dollars.

 

Yet, Japanese day traders are selling the dollar instead.

Whether that's a good idea ahead of a widely-anticipated Fed rate hike and expectations that the BoJ will ease further in the event wage growth continues to disappoint and disinflationary pressures persist is certainly debatable but one thing is for sure, private equity has benefited handsomely from stakes in publicy-listed Japanese companies as Kuroda's multi-trillion yen plunge protection has done wonders to help the Nikkei levitate. Reuters has more:

U.S. buyout funds Bain Capital and Cerberus Capital Management sold big stakes in two Japanese companies as the stock market surges - taking profits and avoiding an expected bout of volatility if the U.S. Federal Reserve raises rate later in the year, investors said.

 

The buyout specialists' sales came as the market capitalization of shares listed on the Tokyo Stock Exchange's main board hit a record high last week, surpassing the previous peak hit in December 1989, as Prime Minister Shinzo Abe deployed pro-growth economic policies to boost investor sentiment.

 

U.S. buyout firm Bain Capital is selling down its 70 percent stake in Japanese restaurant chain Skylark Co to less than half.

 

Skylark shares closed at 1,685 yen on Tuesday, 40 percent above the 1,200 yen at which Bain sold the stock in an initial public offering last year.

 

U.S. fund Cerberus last week launched the sale of up to $878 million worth of its shares in rail operator Seibu Holdings

 

"Recent sell downs of shares held by those buyout funds is a reflection of the surge in Japan's stock market," said Soichi Takata, head of private equity at Tokio Marine Asset Management Co. "But buyout firms are also probably mindful of the possible increase in market volatility later this year when U.S. interest rates begin to rise." 

Incidentally, Paul Singer is also exiting "ripe" positions in Japan:

Real estate securities also continues to be an area of current deployment of capital in new situations, but the deployment is more than offset by liquidations of ripe positions in certain markets, especially Japan.

Should 'lift-off' in the US stoke volatility in Japanese equities you can certainly expect the BoJ to move in with still more ETF (and perhaps individual stock) purchases because after all, you can't designate your $100 billion equity book as "held-to-maturity", meaning Kuroda will be forced to keep up the 35 billion yen daily market interventions for as long as absolutely possible lest a sell-off should blow a massive hole in the central bank's balance sheet and that means running the printing presses until they begin to smoke and short circuit. What that will mean for all of the 'Ms. Watanabes' betting on a resurgent yen remains to be seen, but it will likely be supportive for Japanese equity markets which will help PE giants like Carlye Group take portfolio companies like Tsubaki Nakashima Co public and reap hefty profits in the process:

While there are not many public company shares held by private equity firms in Japan, U.S. buyout fund Carlyle Group owns almost all the shares in ball bearing maker Tsubaki Nakashima Co and the buyout fund could list the shares in the near future after failing in 2012, calling off an initial public offering of the company citing market conditions.

For Carlyle in Japan then, it truly is "all ball bearings these days.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 05/27/2015 - 22:38 | 6138688 philipat
philipat's picture

 A Gold versus Yen Chart might have helped illustrate what Mrs Watanabe should have been doing with those Yen?

I remeber on my first trip to Tokyo in 1979 the Yen was at 240 and given the depth of its structural problems and the strategy selected to address them, it will probably go there again.

Wed, 05/27/2015 - 22:39 | 6138708 Redneck Hippy
Redneck Hippy's picture

Virtu is eating Mrs. Watanabe's lunch.  Like taking candy from a baby.

Wed, 05/27/2015 - 23:34 | 6138840 NoDebt
NoDebt's picture

You ever seen a spleen that large?  No, not since breakfast.

Thu, 05/28/2015 - 02:40 | 6139058 Leveraged Algorithm
Leveraged Algorithm's picture

Ms Wannabe = Ms Jim Crammer

Wed, 05/27/2015 - 22:41 | 6138712 Redneck Hippy
Redneck Hippy's picture

It will go there again.  But this time it won't stop there.

Thu, 05/28/2015 - 01:55 | 6139019 HolyfieldsOtherEar
HolyfieldsOtherEar's picture

I lived in Japan during deflation and I liked it just fine. Every week prices went down, my yen went further, I was a king when I traveled abroad. The politicians kept telling us deflation was a problem, I could never figure out why.

Thu, 05/28/2015 - 04:49 | 6139149 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

Deflation is a problem in a debt based economy (Money as Debt) but not on a 100% reserve hard currency such as PM's and yes also Bitcoin.

Thu, 05/28/2015 - 07:47 | 6139321 philipat
philipat's picture

Yet it doesn't make much difference really. I was in Tokyo 3 weeks ago and was still paying $10 for a cup of coffee, more for a beer. Some things never change and the Japanese (Rothschild Chapter) Banksters have it all stitched up, just like their Western compatriots...

Wed, 05/27/2015 - 22:39 | 6138707 q99x2
q99x2's picture

I prefer Mrs Watanabe to Steve Liesman any day.

Wed, 05/27/2015 - 22:44 | 6138722 Dragon HAwk
Dragon HAwk's picture

Wait What what what.. Damn it Shimano.. you got the Monitor Upside down you Idiot...

Wed, 05/27/2015 - 22:46 | 6138726 Cityzerosix
Cityzerosix's picture

Buying Yen? With Yen,presumably. Carry on knitting ladies, don't you know there's a war on.

Wed, 05/27/2015 - 22:49 | 6138734 farmerbraun
farmerbraun's picture

Probably selling their NZ dollars.

Thu, 05/28/2015 - 00:00 | 6138879 Redneck Hippy
Redneck Hippy's picture

That's how the BOJ is planning on supporting the yen.  Print yen to buy yen.  What could go wrong?

Thu, 05/28/2015 - 00:27 | 6138914 Cityzerosix
Cityzerosix's picture

I know these sort of things go on at some insane level but you might as well knit cardigans and exchange them for Yen or socks.

Thu, 05/28/2015 - 04:50 | 6139152 GoldSilverBitcoinBug
GoldSilverBitcoinBug's picture

The beauty of Forex trading: buying yourself Yen with freshly printed Yen !

Wed, 05/27/2015 - 22:52 | 6138743 walküre
walküre's picture

USDJPY is screaming peak and collapse

Thu, 05/28/2015 - 01:49 | 6139008 Karaio
Karaio's picture

O Sr. Watanabe, se para inteligente, recriará Rapidamente Uma Empresa estatal com ESSE nome:

Kaigai Kogio Kabuishi Kaisha.

ISSO NÃO E piada.

Companhia de Colonização Japonesa Criada na DÉCADA DE 1930 Japoneses parágrafo LeVar Pobres Ao Redor do Mundo (deu Certo no Brasil).

Com uma merda acontecendo em Fukushima e Guerra iminente com uma China, material genético presrvar seria interessante ...

Kkkkkkkkkkkkkkkkkk

Thu, 05/28/2015 - 01:50 | 6139013 Karaio
Karaio's picture

Mr. Watanabe, if smart, quickly re-create a state company with that name:

Kaigai Kogyo Kaisha Kabuishi.

This is no joke.

Japanese Colonization company created in the 1930s to take poor Japanese around the world (he worked in Brazil).

With the shit happening in Fukushima and imminent war with China, presrvar genetic material would be interesting ...

Kkkkkkkkkkkkkkkkkk

Thu, 05/28/2015 - 02:42 | 6139059 londoncalling
londoncalling's picture

maybe the completion of five waves up in the usdjpy will be the catalyst to finally kill the equitiy market

i think maybe this time btfd in jpy is not so crazy

current spot 123.65

let's come back in a month or two and see

Do NOT follow this link or you will be banned from the site!