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Hong Kong’s Weaker Financial Hub Appeal is Japan’s Opportunity, Aso Says

Yuko Takeo
·1 min read

(Bloomberg) -- Japan should consider setting up a special economic zone for global banking businesses now that Hong Kong is losing its appeal as a financial hub amid China’s crackdown, according to Japanese finance minister Taro Aso.

Hong Kong’s ability to function as a hub of international finance is being eroded, Aso told reporters in Tokyo. “We need to think about a lot of things, including setting up something like a special zone” for the industry, Aso said Tuesday.

Aso’s comments came after Prime Minister Yoshihide Suga said Monday that he wants to push ahead with efforts to build an international financial center in the country.

Hong Kong’s Woes to Help Japan Woo Financiers, Top Official Says

If Japan is going to win more business in global finance, it needs to encourage more use of English, end the tradition of requiring documents to be physically stamped, and adjust various rules for foreign workers, Aso said.

“Doing this will of course help revitalize the Japanese market,” he said. “We’ve received orders to take action with a sense of speed.”

Economist Koya Miyamae at SMBC Nikko Securities Inc. said past efforts efforts to create special economic zones to boost growth weren’t focused enough, but the idea could work now with Hong Kong losing its attractiveness.

“The situation in Hong Kong isn’t going back to the way it was,” he said, adding that Japan will still need to offer measures such as tax breaks to lure businesses away.

(Adds economist’s comments.)

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

Latest Stories

  • JPMorgan Sees S&P at 3,900 If Trump Wins Election: Taking Stock

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While a number of traders have come to consider a Democratic sweep followed by a prompt fiscal deal among bullish scenarios for the equity market, Lakos-Bujas disagrees, seeing Trump’s victory as the most favorable outcome.“A ‘Blue Sweep’ scenario is expected to be mostly neutral in the short term,” JPMorgan’s strategists including Lakos-Bujas said in a report dated Friday. “It would likely be accompanied by some immediate positive catalysts (i.e. larger fiscal stimulus/infrastructure) but also negative catalysts (i.e. rising corporate taxes).”With days left until the election, traders are shrugging off the risk of a contested election -- at least judging by a flattening volatility curve -- corresponding with polls showing a widening lead for Joe Biden over the past month. Near-term uncertainty has remained elevated, with the Cboe Volatility Index stuck near a 30 level for weeks now, likely reflecting concern that sectors of the economy and markets that the candidates have referenced the most could see some wild swings post-election.A quick look at the top constituents of a Biden and Trump baskets of stocks created by JPMorgan, which bet on potential winners from either Democrats or Republicans taking control of Washington, shows the stakes are sky-high. Alternative energy and green-tech stocks in the Biden basket, for instance, have outperformed traditional energy and fossil fuel companies, among the top winners from Trump’s victory, by 84 percentage points since June, data compiled by JPMorgan show.Earlier: Barclays Sees VIX Plunging to Pre-Covid Level in Clear Biden WinFutures on the S&P 500 Index are trading 1% lower following losses in Europe’s Stoxx 600 Index and a dip in the Shanghai Composite Index on the first day Communist Party’s four-day meeting. News over the weekend confirmed a rising number of infections on both sides of the Atlantic, pushing Treasuries and the dollar higher as investors rushed into havens. Futures on the Nasdaq 100 Index are 0.9% lower after Europe’s application software giant SAP SE dropped as much as 21% after cutting its revenue forecast for the full year.Notes From the Sell Side:Apollo Global Management was upgraded to outperform at Evercore ISI, which wrote that recent share-price weakness related to Leon Black’s relationship with convicted sex offender Jeffrey Epstein was overdone. 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Watch HSE CN, CVE CN and companies like SU CN, IMO CN for a move.China said it will impose unspecified sanctions on defense contractors Lockheed Martin, a unit of Boeing Co. and Raytheon Technologies after the U.S. approved an arms sale to Taiwan last week, Chinese Foreign Ministry spokesman Zhao Lijian said Monday. Watch BA, LMT and RTX for a move.Watch KO after Barron’s says the beverage company is an under-appreciated post-pandemic reopening play.Your 64-Hour ICYMI:France set a record for new Covid cases, while Spain’s be Italy announced new restrictions. The U.S. reported record coronavirus infections for the second day in a row, adding 85,317 cases. 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Airbnb is splitting its privately held shares ahead of a planned initial public offering, according to an internal email.The Los Angeles Dodgers defeated the Tampa Bay Rays on Sunday night to be just one win away from their first World Series title since 1988. UFC lightweight champion Khabib Nurmagomedov announces emotional retirement after latest victory, saying he doesn’t want to keep fighting again following the death of his father, who served as his coach, from the coronavirus.Tick-By-Tick to Today’s Actionable Events:6:30am-- HAS earnings8:30am-- Sept. Chicago Fed Nat Activity Index10am-- Sept. New Home Sales10:30am-- Oct. 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The company inhabits the mortgage-backed security niche, with $104 billion in total assets, primarily mortgage securities backed by Freddie Mac and Fannie Mae. Annaly is one of the market’s largest REITs.The corona crisis was hard on Annaly, as the economic crush of the first quarter made it difficult for loan holders to make payments. As the economy bounced back in Q2, however, Annaly’s fortunes reversed and the steep losses from Q1 turned into modest gains. Q2 revenues came in at $979 million, with EPS, at 27 cents, beating the 23-cent forecast. Looking ahead, the forecast is a 26-cent EPS for Q3. It’s important to note that Annaly has beaten the earnings forecast in each of the past three quarters.Turning to the dividend, Annaly has remained a reliable dividend payer over the past several years, with a history of adjusting the payment to keep it sustainable. The current dividend is 22 cents per common share, and was paid out at the end of September; at that rate, the yield is 12.27%. In an era of near-zero rates from the Fed, NLY’s dividend return is sky-high.JMP analyst Steven DeLaney is impressed with NLY. The 5-star analyst pointed out, “The combination of dividends paid during the [second] quarter and the sterling book value gain—the company’s best quarterly gain since the Great Recession of 2008-09 [...] We believe NLY shares should trade at a meaningful premium to peers based on the company’s size, scale, and, now, its internal management structure."DeLaney rates the stock an Outperform (i.e. Buy) along with an $8.50 price target. This figure suggests a 20% upside potential from current levels. (To watch DeLaney’s track record, click here)Overall, there have been 8 recent analyst reviews of NLY shares, breaking down to 5 Buys and 3 Holds, giving the stock an analyst consensus rating of Moderate Buy. The $8.04 average price target implies a 13% growth potential from the current trading price of $7.10. (See NLY stock analysis on TipRanks)StoneCastle Financial (BANX)Next up, StoneCastle, is a management investment company, with a portfolio that includes moves into alternative capital securities and community banks. The company focuses its investment activity on capital preservation and current income generation, committing to returning profits to shareholders. StoneCastle’s investment portfolio totals over $133 million, of which 32% is credit securitization, 26% is debt securities, and 15% is term loans.During the second quarter, BANX saw over $2.6 million in net investment income, coming out to 41 cents per share. The company’s net asset value rose to $20.27 per share at the close of the quarter; that figure was $20.93 by September 30.BANX paid out a 38-cent quarterly dividend in Q2, a payment which the company has held up reliably – with one blip upwards in December 2018 – for the past three years. At $1.52 annually, the dividend yields an impressive 8%.5-star analyst Devin Ryan covers this stock for JMP, and he likes what he sees. “The company invested a healthy $36M during the [second] quarter, which included some higher yielding and more attractive securities, which drove the sequential increase in net investment income… Given a strong quarter of investing, particularly into attractive yielding securities, net investment income stepped up solidly in 2Q20. Moving forward, given the strong 2H20 outlook for deployment, we believe it is likely that net investment income will continue to move higher… BANX continues to more than cover its current quarterly dividend of $0.38, and we believe this will continue to be the case in the coming quarters,” Ryan opined. Ryan’s is the only recent review on record for this stock, which is currently selling for $18.15. He rates BANX an Outperform (i.e. Buy), with a $22 price target that indicates a possible 21% upside for the next 12 months. (To watch Ryan’s track record, click here)BRT Realty Trust (BRT)Last but not least is BRT Realty Trust, a real estate investment trust focused on multifamily properties. The company acquires, owns, and manages apartment dwellings, and currently boasts a portfolio of 39 properties across 11 states, totaling over 11,000 individual apartments. The company has felt a serious hurt from the ongoing corona crisis, and reported a net loss of 25 cents per share for the calendar second quarter this year. At the same time, BRT did manage to collect 98% of rents in Q2, and saw average occupancy remain above 93%. This bodes well for the company, as it does not have to carry and maintain empty or non-paying units.Also on a positive note, BRT kept up its dividend payment. The company has been gradually raising the quarterly payout for the past three years, and the current dividend, of 22 cents per common share, annualizes to 88 cents and gives a yield of 7.1%. This is more than triple the average yield found among S&P-listed companies, and more than double BRT’s dividend-paying peers in the financial sector.JMP’s Aaron Hecht sees BRT holding a solid position in its niche, writing, “With a lower price point product spread across Sunbelt markets, the BRT portfolio is generating strong results compared to peers with high-density urban market exposure... Rent growth averaged 2.2% for renewals and 0.2% for new leases, while minimal concessions were given. Rate growth and occupancy were similar in July and August 2020 compared with 2Q20.”Hecht rates the stock an Outperform (i.e. Buy), with a $15 price target that implies a one-year upside of 20%. (To watch Hecht’s track record, click here.)Overall, BRT has a Moderate Buy rating from the analyst consensus, based on an even split between Buy and Hold reviews. The stock is selling for $12.56, and the average price target of $13.25 suggests a modest gain of 5%. (See BRT stock analysis on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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We are pleasantly surprised by the early success of the Pay-pay-View initiative given the $1.35 million in ticket sales to date in 2020. Going forward, we note that the current revenue sources are now much more diversified and predictable and we are encouraged by the increasing number of well-known brands as sponsors and advertisers,” Hickman wrote.To this end, Hickman rates LIVX shares a Buy, and his $6.50 price target implies a whopping 222% upside for the coming year. (To watch Hickman’s track record, click here)Other analysts also take a bullish approach. LIVX’s Strong Buy consensus rating breaks down into 4 Buys and zero Holds or Sells. Additionally, the $6 average price target puts the potential twelve-month gain at 197%. (See LIVX stock analysis on TipRanks)Rimini Street (RMNI)Software is big business in today’s digital world – but it doesn’t always work as advertised, making support a necessity. Rimini Street is a leader in third-party software support, offering customers support for some of the big names in business software.While Rimini offers an essential product, the company’s EPS is notoriously low despite strong revenue numbers. At the top line, Rimini has reported $77 million to $78 million for the past three quarters – but EPS has remained below 8 cents. The first quarter of this year saw a net loss of 1 cent per share.Subsequently, Rimini found itself on the losing end of a legal battle with Oracle over copyright infringement. As a result, RMNI shares are down over 40% since August highs.That was the bad news. Mark Schappel, 5-star analyst with Benchmark, summarizes the possible silver lining.“While we are not attorneys, and understanding complex legal matters is not one of our strengths, the stock’s reaction since the ruling — down about 20% — strikes us as a bit of an overreaction since RMNI’s business remains on track, the court ruling doesn’t create operational downside, and the shares currently trade at a ‘going out of business’ valuation,” Schappel wrote.Accordingly, Schappel rates the stock a Buy and gives it a $10 price target suggesting an impressive 222% growth potential. (To watch Schappel’s track record, click here)This is another stock with a unanimous Strong Buy analyst consensus rating, this time based on 3 recent reviews. Rimini Street’s share are selling for $3.10 after the recent price collapse, but Wall Street sees potential here. The average price target, $7.67, suggests a one-year upside potential of 147%. (See RMNI stock analysis on TipRanks)Energous (WATT)The proliferation of mobile devices, and improvements in battery technology, have brought a focus on charging technologies. Energous holds a leading position in the wireless power and charging niche. The company’s WattUp system supports fast, efficient charging using RF-based wireless tech. The system can be tailored for home or office use, based on the number and type of devices to be charged. It has found applications in the automotive, industrial, medical, and retail industries.In specific advantages, Energous has the world’s first FCC Part 18 certification for wireless charging technology, an important lead in the industry. The company also holds 215 patents, with more on the way. This past September, the company received regulatory approval for a 1-meter ranged wireless charging broadcast.Like many companies specializing in emerging technologies, Energous regularly posts quarterly net EPS losses – but for the past two years, the trend in the company’s net loss has been steadily improving. The EPS loss has fallen by more than half in that time, moving from 49 cents n 3Q18 to 20 cents in the most recently report, for 2Q20.Despite an improving fiscal situation, WATT shares are down 37% in the past two months. The low share price, however, opens up opportunities for investors, according to Roth Capital analyst Suji Desilva. The 5-star analyst rates the stock a Buy, and his $7 price target indicates a possible 182% in upside potential. (To watch Desilva’s track record, click here)Supporting his stance, Desilva notes, “We believe WATT is experiencing increasing new customer engagement activity. As an example, management indicated that four Tier-1 customers are evaluating use of WATT technology and that the company is making inroads into newer military engagement opportunities. We believe the recently launched WattUp PowerHub development kit is helping drive charging application interest across fitness bands, smartwatches, hearables, smart glasses and medical devices to benefit. Wecontinue to expect a volume ramp in 2H20.”Overall, the Moderate Buy analyst consensus on WATT shares is based on two recent Buy ratings. The stock has an average price target of $6, suggesting a 152% upside from the current share price of $2.38. (See WATT stock analysis on TipRanks)To find good ideas for penny stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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