Mitsubishi Financial Units Divided on Forecasts for Japanese Bond Yields
Whither Japan’s bond yields? According to Mitsubishi UFJ Financial Group Inc., they may hold near current levels through the end of the fiscal year. Or they may plunge back toward a seven-year low, depending on whom you ask at Japan’s biggest publicly traded bank.
Tatsushi Shikano, senior economist at Mitsubishi UFJ Morgan Stanley Securities Co., on Nov. 18 said 10-year yields will be at 1.15 percent by the end of March. Two days earlier, Takehiro Sato, his counterpart at the Morgan Stanley MUFG Securities Co. brokerage unit, projected yields will drop to 0.8 percent.
“We don’t provide company-wide views. Each economist and strategist releases his or her own projections,” said Susumu Taroura, a Mitsubishi UFJ Morgan Stanley spokesman in Tokyo. Morgan Stanley MUFG is a “separate company with separate operations."
Natsuo Nishio, a spokesman at Morgan Stanley MUFG said the two companies maintain their own research functions, and it was natural for their analysis and market views to differ.
The Mitsubishi UFJ group invested $9 billion in Morgan Stanley in 2008 and this May started Mitsubishi UFJ Morgan Stanley Securities, which includes the Japanese company’s wholesale and retail operations in Japan and Morgan Stanley’s investment-banking unit. Morgan Stanley MUFG houses the U.S. firm’s remaining businesses in Japan.
Each business division at Mitsubishi UFJ does its own fundamental analysis and offers forecasts for bond yields, stocks and currencies, said Jun Ishii, chief fixed-income strategist at Mitsubishi UFJ Morgan Stanley. He forecasts 10- year bond yields will slide to about 0.95 percent by the end of March.
Ten-year yields reached 1.190 percent last week, the most since Sept. 6 while still the lowest among 32 global bond markets tracked by Bloomberg. They reached 0.82 percent last month, the least since 2003. The yield will end this year at 1.04 percent before rising to 1.12 percent in March and 1.24 percent by the end of 2011, according to a Bloomberg survey of analysts, with the most recent forecasts given the heaviest weightings.
House views were common in Japan in the 1980s, until consolidation in the financial industry brought together overlapping departments and analysts, said Ishii at Mitsubishi UFJ Morgan Stanley. Japanese investors don’t seem uncomfortable with the differing views, he said.
Mitsubishi UFJ itself was created in the 2005 merger of Mitsubishi Tokyo Financial Group Inc. and UFJ Holdings Inc.
The practice of having different outlooks isn’t unusual in Japan, said Yuuki Sakurai, who helps oversee the equivalent of $8.7 billion as chief executive officer at Fukoku Capital Management Inc. in Tokyo.
‘‘Unified views are not interesting,” said Sakurai. “There should be a variety of opinions. I want to know about the thinking process of the analysts, rather than get the right forecasts."
Multiple views within one company can cause confusion in the market, said Hiromasa Nakamura, a senior investor in Tokyo at Mizuho Asset Management Co., which oversees the equivalent of $35.9 billion.
‘‘I can understand that there may be many opinions within one company, but there should be only one opinion as the house view,’’ said Nakamura, whose company is part of Mizuho Financial Group Inc., Japan’s second-largest publicly traded bank by assets.
Mizuho employs a similar practice to the Mitsubishi group, with two brokerages in the group -- Mizuho Securities Co. and Mizuho Investors Securities Co. -- releasing separate analysis and forecasts.
Akihiko Inoue, chief market strategist at Mizuho Investors expects 10-year Japanese yields will be at 1.1 percent at the end of March. Testuya Miura, chief market analyst at Mizuho Securities, is targeting 1 percent.
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