What Worked Asia - 26 Feb 2016 - Value / Beta were hurt in most regions after last week's bounce

What WorkedIn Hong Kong there was a selloff in high Beta names.  Alibaba Health Information was down 15% and KWG Property Holdings was down 12%. In China there was a slight move away from Large-cap names. Zhejiang Expressway was down 10% and Tingyi Holdings was down 10%. Value and large-cap names were hurt in Singapore, Keppel Corp was down 3% and Ezion Holdings was down 4%. Taiwan saw a move into Value and away from Growth names. Some strong sales growth names that were hurt were Motech down 9% and Giga Solar Materials down 9%.  India also saw a good selloff in Value this week with a slight move into Quality. AIA Engineering was up 3% and also EIH Limited was up 5%. Malaysia was one of only place that value worked this week. Dividend Yield was very strong. Press Metal was up 3% and Pavilion Real Estate Investment was also up 4%. Nothing really stood out in South Korea.

Who Moved 151 names moved on Volume this week. The volume spikes were well distributed across the region with a slight focus in the Financial Sector. On the positive side, XinRen Aluminum was up 79%, Freeman Financial Corp was up 37% and Bank Tabungan Pensiunan was up 37%. On the other side, OBI Pharma was down 32%, KEPCO was down 24% and KWG Property was down 11%.


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What Worked Japan - 26 Feb 2016 - Selloff in Value after the strong bounce last week

What WorkedAfter last week’s strong bounce in Beta and Value, this week we saw a moderate selloff in Value and a slight move back into Retail names. Since the middle of October last year we see that PE has one strong week followed by a month or so of underperformance. If that holds true this time we have two more weeks of Value hurting. The last time that PE consistently did well was back in April/May of 2015. Low PE names that did not do well this week were Nippon Shokubai down 11%, Shinsei Bank down 9% and Mitsubishi Gas Chemical down 8%.  Retail names that bounced back were Aiful up 10%, Softbank up 10% and Fujikura also up 10%.

Who MovedCompared to last week, volume really dried up. Only 26 names moved on strong volume, which is about normal for Japan. On the positive side, Central Glass was up 21%, Unipres was up 16% and Trend Micro was up 16%. On the other side, ABC-Mart was down 5%, Temp Holdings was down 4% and Inpex was down 4%.



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What Worked Australia - 26 Feb 2016 - Value 2 for 2, slow down in momentum sell-off

What Worked – Value made it 2 for 2 this week, the main difference being that Dividend Yield also came along for the ride, the notable exception here is the high yielding financials that took a hit. Nine Entertainment (NEC, +4.8%), CSR Limited (CSR, +0.9%) and Spotless Group (SPO, +11.5%) among the highest yielding non-financials that posted positive returns for the week. Momentum all managed to be in the red this week, although the numbers are getting smaller each week, almost looking about time for the reversion to cease. While Size produced good results for the week, this was largely on the back of a sell-off in the large cap space rather than a swing into the smaller names. Commonwealth Bank (CBA, -3.8%), Westpac (WBC, -4.2%) and BHP Billiton (BHP, -6.2%) all dropping significantly. Of thew top 10 biggest names in the ASX 200 only one managed to finish the week higher this week.

Who Moved –  Volume continues to be reasonably heavy during these wild swings, and this week was no different. 33 names moved on significantly higher than normal volumes this week. In the winner’s circle, Altas Iron (AGO, +40.0%), UGL Limited (UGL, +20.4%) and Whitehaven Coal (WHC, +18.3%) all up very strongly, while Cover-More Group (CVO, -12.4%), Automotive Holdings (AHG, -7.1%) and Independence Group (IGO, -6.7%) finished the week lower on high volumes. 


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The ECB and Draghi’s Confidence Game

Source: Bloomberg ECB Interviews, Custom Products

(Picture does not include less active/vocal members [Stournaras, Georghadji, Reinesch, Bonnicim Costa, Makuch)

This is an excerpt from a report ‘Central Banks’ Monetary Policy and Implications for the Yen’ to be published soon

As the ECB Governing Council prepares for its March 10 monetary policy meeting, the rhetoric in anticipation has continued to build. Members are cognizant of the disappointment that arose in the wake of the December meeting where the deposit rate was tweaked down to -0.3% and the QE program was extended for six more months to March 2017, causing the euro (EURUSD) to appreciate by 3%.

Subsequently, the focus has been divided between overseeing the progress on the Euro Zone economy and concerns of a slowdown in China with its relaxation of the RMB trading bands as a possible precursor for devaluation.  Mr. Draghi has also recently been focusing on pressures on European banks arising from weakness in commodity and oil & gas prices as well as a widening in sovereign yield spreads on peripheral countries Italy and Portugal. Though this has had a limited impact on Euribor-OIS spreads, which in fact had expanded more in the US (presumably due to higher exposure to commodity and energy sectors).

Source: Bloomberg, Custom Products

Despite a desire not to disappoint markets, it would seem premature to add to further QQE so shortly after the December meeting and amidst uncertainty revolving around a possible ‘Brexit’ (which has made the ECB’s job easier by dragging down the euro) . Mr. Draghi has rarely enjoyed unanimity in ECB decisions, so recent statements by Draghi of frustration with low inflation, supported unanimously by the five-member ECB Executive Committee, makes further easing in March the base case. In addition, Mr Draghi's apparent impatience to push for action now, may be understood in the context that two of the ECB Governing Council's most hawkish members (Weidmann and Hansson) will not have a vote in the March meeting (the monthly rotation in voting rights on the Governing Council means that only 15 of 19 national bank governors are allowed to vote at each monthly meeting).

Though January Core CPI (P) was only up 1%, it is still the highest since Q4 2012 while the CPI (P) was 0.4%, also the best since January 2012.  (The HICP basket also seems to have been dragged down 40bps by a heavy 15% weighting in transportation). Still, the PPI (Producer Price Index) in December continued to be weak at -3%. Q4 GDP maintained a positive trend, up 0.3% MoM and 1.5% YoY. While provisional February PMI numbers announced earlier this week, between 51.0 and 53.0 disappointed; though still comfortably above contraction levels.

Several Governing Council hawks (Merch, Jazbec, Weidman) have continued to  warn this month that the council not be seen as being reactionary by trying to address what could be temporal moves in crude oil prices.  While the doves (Villeroy, Visco, Constancio) reiterated that the ‘deflation battle was not over’ and that ‘sometimes aggressive action is necessary before inflation falls further’.[1] Thus there is a desire to be pre-emptive as it is feared that inflation could fall further from 0.4% in January, possibly testing test zero around June, as 5-yr forward inflation swaps have fallen to 145bps from the 170bps level as of the December meeting (though this is an envious level for any BOJ member who is looking at 5-yr forward inflation expectations of 10bps).

Mr Coeure, the former French Treasury  Deputy General director, will likely continue the conciliatory role, trying to build consensus with the undecideds (Nowotny, Likanen, Rimsevics). Especially, Mr. Likanen, who was previously opposed to further easing but has recently shown a willingness to entertain further easing. Another neutral member, Mr. Nowotny, continues to ratchet down market expectations as being too aggressive, in order to avoid further disappoint like in December.

Over the last four years, Mr. Draghi  has gone from wanting to protect the euro to driving a portfolio rebalance, which has seen a shift to riskier assets (particularly peripheral sovereign debt). The bank has learned from earlier missteps from the two earlier LTROs (2011-2012)  as to the need to incentivize bank lending by providing a wide enough corridor between lending and deposit rates. Reduction in the deposit rate has also met with some success in lifting inflation expectations (albeit  fleeting), while 10.4% (P) January unemployment in the Eurozone continues to be a worry, it is perhaps better addressed with fiscal policy which remains contractionary.

Source: Bloomberg, Custom Products

Though the ECB was successful in its defense of the constitutionality of OMT (outright monetary purchases), at the European Court of Justice in Brussels, last June. This ‘whatever it takes’ stance,  which it made provision for in 2012, has yet to be applied. Under the current PSPP (Public Sector Purchase Program) launched March 9 2015,  88% of the €60bn/month bond purchases have been allocated to government bonds and recognized agencies. 92% of these purchases are carried out by national central banks in proportion to their ECB capital keys (share of ECB total capital) with an issuer specific limit of 33%, so that the ECB not give the appearance that it was risking its equity to subsidize weaker states.[2]

There remains continued misgivings from the Bundesbank that the ECB must clearly separate the roles of oversight and policy implementation, before the bank directly purchase members’ sovereign bonds, lest it appear to be directly aiding weaker members.  The Bundesbank is also still insisting on a haircut, if necessary, before any sovereign bonds are actually bought by the central bank directly.

The ECB, under Mr Draghi, has conducted itself in an academic fashion, with a strong focus on influencing expectations through communication. It separates the times for scale, maturity and monetary rates announcements to gauge the market’s reaction to each. It also delineates the clear guidance from announced scale. In this way, the ECB has been able to measure the market’s reaction to all aspects of its quantitative easing[3]  Still Mr. Draghi has always insisted that all he needs is a simple majority to carry the day, and given recent votes, this is fortunate. The ECB also does not disclose dissenting votes in final decisions, ostensibly to avoid political pressure and maintain the operational independence of its members.[4] Though one cannot help but get the impression all votes don’t necessarily carry the same weight.

Source: Bloomberg, Custom Products

The ECB’s quantitative easing is already far in excess of any reasonable level deemed necessary to ensure discipline in the overnight market or maintain the portfolio rebalance.[5] However, Mr. Draghi conceded in a December 2015 speech in New York that QE would likely have to exceed €1.46trn thus far if 1.8-2% inflation target was to be achieved.[6] As a minimum, the ECB balance sheet is likely to rise to around €3.74trn by time QE has ended in March 2017.

Source: ECB

Whereas the Fed has been the most aggressive in lowering real policy rates (policy rate adjusted for CPI) since the onset of the GFC (global financial crisis), the ECB now seems poised to retake that lead role. While we expect the Bank to emphasize the abundance of policy tools and sources of liquidity in March, the ECB’s main tool will likely be a further cut to its deposit rate to -50bps. This everyone, should recognize, will simply bring about a further succession of quid-pro-quo cuts from Denmark, Sweden, Switzerland and Japan (and possibly China), so that we could be back in the same place in June that we started out at the beginning on the year.


Source: Custom Products

[1] The role of crude oil prices should not be exaggerated for the EU where the correlation is 0.15 ((t-statistic 2.5) while the US correlation is .29 (t-statistic 5.2).

[2] Benoit Couere, ECB Board Member March 10, 2015 (clearly stated that purchases made by national central banks will not be subject to loss sharing).

[3] Even Mr. Draghi’s predecessor, Jean-Claude Trichet often had the ECB plant rumours in the market that it was buying certain sovereigns by asking for quotes in the short end of the yield curve for Portuguese and Irish bonds in March 2011, when later disclosure revealed that the ECB holdings had actually declined. But the impact on yields was clear. (Depooter, Michiel)

[4] Camila Villard Duran, The Framework for the Social Accountability of Central Banks: The Growing Relevance of the Soft Law in Central Banking, European Journal of Legal Studies, Issue 19

[5] The Bank’s own calculation and our calculation confirm that no more than €300bn is needed to keep Eonia and Euribor rates within 10bps of the deposit rate.

[6] Bloomberg 1.4.16

Crime in Japan – Part 2 - The break-up of the nuclear family & the end of jobs for life

The economic toll behind the break-up of the nuclear family in Japan

Did you know that 25% of all marriages in Japan are couples that marry due to unplanned pregnancies? In Okinawa that rate is 42.4% Did you also know that 25% of all households with children in Japan are single-parent? The dutiful wife getting up at 4am to make breakfast for her samurai salaryman husband is virtually non-existent and half of divorces happen in age groups 55 years old and above. 25% of divorces occur in the 65yo+ cohort. The government changed the law in 2007 entitling wives to up to half of their ex-husband’s pension. Still the trend was rising sharply even before its introduction. Mrs. Watanabe has had enough of her salaryman and wants out.

Domestic violence (DV) is seeing a very sharp upturn in Japan. Between 2010 and 2014, DV has soared 60.6% against women and 650.1% against men. Most cases (over 60%) of DV were marital related. Recognizing the growing problem, the police have even developed a new category of DV, which defines a divorced couple who are living under the same roof. Economic conditions for some families has become so tight that the stress of living with someone they do not want to be with now gets its own category, scoring over 6,000 cases alone in 2014.

Source: Japanese National Police Agency (JNPA)

Between 2010 and 2014, total reported stalking cases surged 36.6% to 24,837. 50% of stalking incidents recorded were related to partners (including former partners).

The Ministry for Health, Labor & Welfare (MHLW) has 208 child consultation centres, which fielded over 88,000 cases in 2014, a 20.5%YoY increase or 22x the level of 20 years ago. Despite a 2.4x jump in social workers inside these child consultation centres over the last two decades they can’t keep up with the demand. The Japan National Police Agency (JNPA) statistics show a sharp jump in arrests for child abuse, 80% being due to physical violence causing injury. In 2013, 36 abused children died with 16 of them under 1 year old. Police note that child abuse is being driven by the breakdown in traditional family, unemployment and poverty, stats which we showed earlier to be rising steadily.


Source: Statistics Bureau

Crime in Japan is a problem that will not simply disappear with the evolving mix of aging demographics, poverty, unemployment, underemployment and economic stagnation. We note that the previous jump in Japanese crime started in 1997 and ran to a peak in 2003. Unemployment was a factor. In the crime boom of 2010-2016, we note that the unemployment rate has fallen but it masks disturbing trends in lower paid part-time work which is putting families under financial stress.

There is the smell of fear in the workplace. In the period 2002 to 2013, labour disputes almost trebled. Bullying and harassment (which are obviously less palatable for companies to have floating in the public domain) as a percent of total disputes has ballooned from 5.8% to almost 20% over the same period.

Another dilemma in the data is the employment referrals by government unemployment agencies for middle or advanced aged staff (45yo+) shows that around 25% of them end up with work in a fixed term capacity of more than 4 months.

Ironically active retraining of inmates to help them find new careers after release occurs in prison. Why isn’t more being spent on finding ways to redeploy those out of prison? The idea that any job will do is a recipe for failure and cannot be relied upon as a sustainable program. Most vocational training by Hello Work, the government unemployment insurance agency, is broad and non-specific. Any specific job training will be ‘paid for’ which ultimately is limited to an unemployed person’s financial status and confidence a job will be attainable at the end of it.

Crime in Japan  - Part 3 – Yakuza, Murder, Drugs, Fraud & the Police – out in March

Full Report Available here.

Crime in Japan – Part 1 - The Economics of Elderly Crime

Geriatric Jailbirds – Breaking into Prison

While retirement for many of us is some way into the future, common sense would dictate that once we reach it, committing crime is probably furthest from our minds. Hugging one’s grandchildren is surely a better option than talking to them through a glass window. If you are in prison you are supposed to be old when you leave not when you enter it. Not so in Japan.

The incidence of crime committed by the elderly is soaring. 35% of all arrests for shop-lifting involve the retiree demographic, up from 20% (2001). Since 2001, their representative percentage of the prison population has doubled and 40% of repeat offenders among the elderly have committed crimes six times or more in order to return as a guest of His Excellency. While much of it is petty crime, there seems a deliberate attempt to ‘break into prison’ as a way to survive. A roof over their head, three square meals a day, no utility bills and unlimited free health care. The only real negative being the harsh prison rules about when one can talk to fellow inmates. To the state, one inmate costs ¥3.8mn to incarcerate and we estimate around ¥300,000 in court and administration fees per incarceration. Furthermore supplemental healthcare to the prison system has doubled in the last 7 years. We study the economics of what might drive someone to make the choice to commit crime and look at the government’s current funding for income support. Is it being spent wisely?

Criminals Arrested By Age Group In Japan

Source: Japan National Police Agency (JNPA)

Such has been the overpopulation in prisons, the government has had to increase capacity by 50% in the last decade and boost the incidence of early release and parole to create space for what one can only guess is a way of developing state sponsored retirement villages. Female prisons are already full but the MoJ wants to increase the number of female prison guards to prepare for the anticipated increase in elderly crime. 

At the last (average) count in 2010, there were 4,069 elderly inmates. While that is only 14 people per 100,000 aged over 65 that rate has been climbing from 12 in 2004 and around 8 in 2000. We estimate at the 5.4% compound growth rates experienced to date, that 31 people per 100,000 is possible by 2036. At that rate, 11,636 elderly citizens would be in jail at a cost to the government of ¥42bn per annum as health cost related budgets have been appropriated at around ¥120,000 per elderly inmate.

‘Supplemental welfare’ or income support paid by the Japanese government is approximately ¥3.6 trillion per annum and spread across 5.9mn people (an average of ¥605,000 per person). ¥1.7 trillion of that total is for medical and nursing care (c.¥1.2mn per person). Note this portion of healthcare is separate from the ¥36 trillion annual healthcare budget.

What are the economic sums that drive a pensioner to consider committing crime? We surmise that a measly base pension of ¥780,000 (US$7,000) per annum won’t get one very far. When throwing on top of that healthcare, rent, utilities and food it is not hard to get someone into net-negative income territory. Sure, supplemental income through part time work may close the gap but perhaps that some are resigned to their fate to consider jail as an option.

There is another elephant in the room. Suicides among pensioners are now 40% of the total, up from 27% in 1983. One gets the feeling that all of the things that retirees had come to expect from a society is in reality against their long-entrenched cultural thinking. Wives of retirees now make up 6% of all reported suicides. They are obviously not adjusting to having the bread winner at home every day. We break down suicides by prefecture and show the clear link to elderly populations, low population growth and relatively smaller GDP compared to national averages. The economic malaise in the regions contradicts a vibrant Tokyo and much of what is going on does not get reported. Domestic violence committed by the elderly has surged 2.4x in the last 5 years. The number of murders committed are even higher.

Solutions are hard to fathom. By 2060, 40% of the population will be above 65 years of age. Would Japan be better off building large scale dormitories that would include medical facilities in return for pension sacrifice? This way these pensioners could trade off prison life for state sponsored shelters at one would expect a fraction of the cost of adding to prison population. Surely if the government met potential pickpocketing pensioners half way then it would be preferable to both parties on cost and shame grounds. Would a Benesse (9783) be interested in running a public-private initiative (PPI) to help the government build such centres given they are already investing in old age care facilities? Benesse wants to expand its elderly care business to 20% of the group total by 2020. The government has taken this approach of PPI with building day-care centres as JP Holdings (2749) has benefitted greatly from. The government needs to think of how to revitalise the regional areas. With slowing economic growth, working age employees flock to the cities where jobs are more likely. It exacerbates the pressure on the regions to survive and poses longer term risks for the companies in the region to sustain employment. PPI projects in the regions makes sense from a variety of perspectives which we discuss might alleviate the pressure.

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What Worked Asia - 19 Feb 2016 - Value and Beta drove most Markets in Asia this week

What WorkedBeta and Value bounced in Hong Kong this week. Beta has not done this well in Hong Kong since last September. Obviously there was a huge reversal in price momentum. Names that did well were Alibaba Health up 37% and Season Pacific Holding up 23%. In China it was all about Beta and to a lesser degree Value. Huaneng Renewables was up 35% and Huadian Fuxin Energy was up 30%. In South Korea, it was the opposite. Value was the strongest and Beta trailed behind. Value names that did the best were OCI was up 26% and Ssangyong Cement was up 12%. Singapore was all about Beta and Large cap. The one-week price reversal was through the roof high. Names that were up were Sembcorp Marine was up 20% and Noble Group was up 18%. Interestingly in India, Value barely worked and Beta did nothing this week. Indonesia was also all about Value and Beta did nothing this week. Names that were up were Eagle High Plantation up 27% and Media Nusantara was up 10%. Value and Beta did well in Malaysia. SapuraKencana Petroleum was up 9% and Press Metal was up 5%.

Who Moved218 names moved on volume this week. A good number of volume spikes came in India and South Korea. Relative to other regions, there were not a lot of spikes in China and Hong Kong. At the Sector Level, the Finance Sector dominated the spikes. On the positive side, Thai Airways International was up 37%, Huaneng Renewables was up 34% and Just Dial was up 26%. On the other side, COSMAX was down 21%, Enseval Putera Megatrading was down 18% and Korea Kolmar was down 17%.


Factor Performance Asia ex-Japan

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What Worked Japan - 19 Feb 2016 - Value / Beta bounced hard on very strong volume

What WorkedHuge bounce in Value and high Beta names. With TOPIX bouncing 8% this week, Value (particularly PE), Beta and names with a high percent of Foreign investors really did well this week. High Beta and names with a high % of Foreign Investor have not done this well in the last 2 years. The last time PE did this well was last October. Value names that did well this week were Tokyo Tatemono up 26%, Nabtesco Corp was up 21% and Capcom was up 22%. High Beta names  that did well were Sumitomo Rubber Industries up 29%, Sumco up 27% and IHI Corp up 24%. Names with a high percent of Foreign Investors that outperformed were Softbank was up 22%, Capcom was up 22% and ASATSU-DK was up 22%. There was a slight sell off in Retail names as they have done well pretty much every week since the beginning of the year.

Who MovedA very good sign was that this week’s move was on very strong volume. 210 names moved on volume this week. 189 names moved up on strong volume and only 21 names moved down on volume this week. Looking at the names that moved down, Yamazaki Bread was down 12%, Trend Micro was down 9% and Hokuetsu Kishu was down 7%. On the positive side, aside from ASATSU-DK all the above names moved on volume. Other names that moved up on strong volume were DMG MORI was up 19%, Itochu was up 17% and Pola Orbis up 18%.


Japan Factor Performance

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What Worked Australia - 19 Feb 2016 - Value strong, but smaller names the winners

What Worked – For the first time this year value has managed to come in with an IC above our “threshold” of 10%. All value metrics (ex dividend yield) posted very strong numbers this week, the strongest in fact since the week before Christmas. Seven West Media (SWM, +12.7%), Seven Group Holdings (SVW, +5.6%) and Spotless Group (SPO, +16.9%) all amongst the sub 10x PER names that posted better than the index returns for the week. Momentum on the other hand reversed as the names that had run (and become more expensive) flat-lined for the week against the index, and the cheaper names took the lead. Momentum was negative across the board, driven not by profit taking, but a run into index laggards.

Size came into play this week also, having it worst performing week in almost a year. While the large cap names remained in-line with the index, the smaller names saw a dramatic pickup. Mount Gibson Iron (MGX, +5.7%), Cardno Ltd (CDD, +12.5%) and AWE Ltd (AWE, +17.7%) amongst the smallest names in the index that all saw significant returns for the week. All in all, only 8 names in the sub- 1bn AUD market cap range posted a loss for the week.

Who Moved – Strong week for volume as 39 names from the 200 in the index posted significantly stronger than usual volumes. On the winning end were a lot of the smaller names, including Beadall Resources (BDR, +33.3%), Whitehaven Coal (SHC, +26.7%) and GWA Group (GWA, +22.8%), while the other end of the list saw Arrium (ARI, -74.1%), Cover-More Group (CVO, -14.3%) and Atlas Iron (AGO, -9.1%) all come off on the back of very strong volumes.

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Crime In Japan Series - Executive Summary

A tsunami of stats pointing to seismic shifts in society


The state of crime in Japan – a summary

When I first stumbled over the crime data by chance I never envisaged I would have over 120 charts and 100 pages to write about. There is so much for one to take in that I’ve decided to break it up into a series looking at the saddening trends the country now faces. It is a wild ride and will undo a lot of perceptions. This piece is the executive summary and in coming days we’ll investigate elderly crime and the breakdown in the traditional nuclear family and touch on the yakuza, police budgets, Olympic security, financial fraud and murder. Brace yourselves.

Prison Populations in Japan

The Japan National Police Agency (JNPA) and Ministry of Justice (MoJ) databanks are a treasure trove. Alarmingly is the trend in the activities of those above 60 years old. Over one-third of all arrests for shop-lifting involve this retiree demographic, up from 20% (2001). Since 2001, their representative percentage of the prison population has doubled and given the lenient sentences generally given in Japan (even drug offences mostly carry jail terms inside 2 years) 40% of repeat offenders among the elderly have committed crimes six times or more in order to return as a guest of His Excellency.

Such has been the overpopulation in prisons, the government has had to increase capacity by 50% over the last decade and boost the incidence of early release and parole to create space which one wonders is a way of making state sponsored retirement villages. Female prisons are already full (4,500 inmates) but the MoJ wants to increase the number of female prison guards to prepare for the anticipated increase in elderly crime.

Suicides among pensioners is now 40% of the total up from 27% in 1983.

There are now 3.9mn single mother and 664,000 single father households in Japan which combined now contribute almost a quarter of all households with children up from 15% in 1990. 25% of couples now marry because of unplanned pregnancy. The traditional ‘nuclear’ family is no more. Child abuse cases are up 22x over the last 20 years to 90,000.

Domestic violence (DV) is seeing a very sharp upturn in Japan. Between 2010 and 2014, victims of DV have soared 60.6% against women and 650.1% against men. Economic conditions for some families has become so tight that divorced couples are living under the same roof and DV in this category (recently created by the police), scored over 6,000 cases alone in 2014. Police cite economic issues as the largest factor.

Pressure to prevent losing one’s job seems to be a factor in the steady increase in labour disputes. In the period 2002 to 2013, labour disputes almost trebled. Bullying/harassment (which are obviously less palatable for companies to have in the public domain) as a percent of total disputes has ballooned from 5.8% to almost 20%.

What is inescapable is that Japan’s crime is unlikely to peak anytime soon. The trends show that Japan is no different to Greece. When economic conditions reach certain limits, people do what they must do to survive. That the elderly are considering ways to break into prison to seek a better life tells us all we need to know. How bad does a society have to get in order for this to be a viable choice? Mr & Mrs Watanabe are sending a very important warning. Government and investors should take heed.

We run the mathematics on what drives a pensioner to want to be a jail bird and show the government is literally burning up ¥30bn per annum on unnecessary costs which could be solved by sensible public-private initiatives (PPI) that are already used in day-care centres. The formation of state run dormitories would save ¥17bn in prison guard costs alone and reduce costs to the state of the 5.9mn citizens that fall under income support. We will delve into the details in Crime in Japan – Part 1 on Monday Feb 22nd. Stay tuned.

The full summary is available here.