Chapter 502 Big Trouble
In 1989, Bush was elected President of the United States. Nicholson and Gorbach visited China successively, and China officially opened its doors.
In the same year, Japan's stock market reached its peak, with the Nikkei index reaching 38,957 points, a nearly four-fold increase compared to 1985.
The Tokyo Stock Exchange's daily trading volume is 8.8 trillion yen, 1.8 times higher than the New York Stock Exchange across the ocean.
The total market value exceeds 600 trillion yen, accounting for more than 30% of the global stock market.
In other words, one-third of the wealth of listed companies in the world is concentrated in Japan, and there is no doubt that this figure is inflated.
The market value of Japan's listed companies is generally overestimated, and at least half of them are bubbles, which of course includes companies under Shirakawa Holdings.
The simplest example is SIC, which just completed its listing in North America, and its market value is only about US$8 billion.
Although there is a high probability that it will increase later, 8 billion US dollars converted into Japanese yen is only 1 trillion yen.
If SIC were listed in Tokyo, its market value could at least double or triple.
SIC's reputation in Japan was obviously much more famous than in North America, and this was the peak of the Japanese bubble.
Investment institutions and shareholders will definitely follow well-known companies like SIC without thinking.
It is possible that the same scene as the listing of the legendary NTT will be repeated, because of its state-owned background and the booming communications industry.
After the original Telephone and Telephone Public Corporation was split into NTT, it was snapped up by shareholders as soon as it was listed, with the highest price for a single share being 3.18 million yen.
Yes, 3.18 million yen for one stock, this is definitely an unprecedented record in the history of the Neon stock market.
At the beginning, the Ministry of Finance decided to put 1.86 million stocks on the market, with an initial price of 300,000 to 400,000 yen.
As a result, before it was officially issued, it was bought for 1.19 million yen during the underwriter subscription stage.
After the official issuance, the stock price soared by 400,000 yen that day.
In the following two months, NTT's stock price soared to 3.18 million yen, even pushing the entire Nikkei index up 22.4%.
Because there were too many people applying to buy stocks at the beginning of the issuance, NTT limited each person to one share, and purchase was required with an ID card.
As a result, before the listing, NTT received 10.85 million applications, which is about 10% of Japan's population.
The calculation of ordinary people is simple. If they win the new stocks with state-owned background, they will make money as long as they invest.
Based on the calculation of more than 1 million new shares, as long as the stock price rises by 30% on the first day, hundreds of thousands of yen can be earned.
Nowadays, the annual income of a family is around 3.5-4 million yen. If you can earn a month's money in one day, everyone will flock in.
People think that NTT is a benefit given by the government to shareholders, so how could it possibly fall?
Therefore, whenever anyone bought a share of NTT, they would invite friends and family to have a meal together to celebrate.
Many of the wives who line up at the entrance of NTT every day to fill out application forms would even secretly .
This is the legend of NTT’s magical stock, and it is also a wonder that only appears in the bubble era.
Although SIC is not as well-known as NTT among the public, it has relied on its many years of operation and the good reputation of Shirakawa Holdings.
It is not realistic for SIC to increase tenfold like NTT, but a two or three-fold increase is still possible.
However, in North America, its market value is only around US$8 billion. This is because it is on par with Intel and Wall Street is optimistic about it.
It can be seen that at this time, the people of North America and Japan have completely different attitudes towards the stock market.
This is also the reason why Subaru’s market value reached 3 trillion .
The entire Neon stock market is in a bull market phase. As long as it does not reach the point of bankruptcy, the stock price will not fall.
Shirakawa Holdings spent a huge amount of money to become Subaru's largest shareholder. The investment of US$9 billion is indeed very high.
But there is no way. If no action is taken at this time, Subaru will fall into the hands of giants such as Toyota.
As the company with the largest market value in Japan, 9 billion US dollars is not a difficult task for it.
As for re-entering the market after the bubble bursts ? Have you ever seen an automobile group go bankrupt due to the bursting of the bubble?
Impossible, the automotive industry has always been a high-quality asset. Even if Subaru's business is not going well, there is no shortage of buyers.
Therefore, if Baichuan Holdings wants to enter the market, it has to take action even if the current market value is a bubble, otherwise there will be no such opportunity in the future.
All of this is closely related to the stock market and the influx of retail investors.
Of course, the reason why Japanese people are keen on stock trading at this time is closely related to the various policies of the Japanese government.
With the continuous reduction in interest rates in the past few years , banks' deposit interest rates have basically remained at around 0.26%.
The interest on this deposit is almost zero. At the same time, the government also imposes an aboriginal tax on residents' deposits, ranging from 5% to 15%.
Originally, this was a measure aimed at tax evasion by the rich, but before the bubble, Japanese people generally had the habit of saving money.
Now that interest rates have dropped to extremely low levels, and in order to avoid taxes, middle-class families have no choice but to move their money into the stock market or the real estate market.
This is one of the reasons why middle-class families in Japan are now keen on stock trading. Later, as the returns in the stock market become higher and higher, everyone will naturally continue to invest money in it.
As a result, with the whole nation's pursuit, by the end of 1989, the stock market had reached a new height unprecedented in history.
Also because of the inflated stock market, many companies can obtain the funds needed for operations by going public, and bank loans become dispensable at this time.
What should banks do if they cannot lend money? Of course, they should shift their focus to small and medium-sized enterprises and individual users.
Especially real estate developers, they are the bank's largest and best customers.
In the end, the bank's money entered the real estate industry, or the pockets of small and medium-sized enterprises and individual users through these channels.
What do small and medium-sized enterprises and individual users do with the money from bank loans?
The answer is obvious: stocks and real estate!
Since the appreciation of the Japanese yen has affected exports, small and medium-sized enterprises have encountered a crisis, and Japan has not had enough time to upgrade its industries.
At this time, most companies can only use some short-term practices to maintain profit growth, and stock trading is the magic weapon to maintain performance.
As of this year, nearly half of Japan's 1,654 listed companies are engaged in investment and financial management business.
Because everyone is keen on the stock market, the export economy has long become a drag on negative growth.
The performance reflected in corporate financial reports is basically driven by stock market investment.
Even a giant like Panasonic has invested 1.1 trillion yen in financial products.
Yakult, which was famous in the Celestial Empire in later generations, was no less impressive, with its financial business department also investing a starting amount of several hundred billion yuan.
At this time, the figure of hundreds of billions of yen is really just a group of numbers for many Japanese companies.
Look, at this time, all the financial companies in Japan are influencing each other.
A large amount of bank money flowed into real estate, and a large amount of corporate money flowed into the stock market.
The prosperity of the real economy is highly tied to asset prices. Once asset prices collapse, it will cause a chain reaction.
Isn't the Japanese government aware of all this? If nothing else, at least the Ministry of Finance is very clear about it.
Especially the newly appointed Mie Yasuno, who has seen all the magical aspects of Neon.
He hated inflation so much that he watched the prices in Japan more than quadruple from 1970 to 1989.
As for the increase in land prices, let alone four times, it may even be ten times!
How could he tolerate this? The strong-willed Mieno Yasushi dared not even give face to the head of the group, so how could he care about the Ministry of Finance?
The previous few Bank of Japan governors were all "lackeys" of the cabinet's economic policies.
But who is Mieno Yasushi? He is a ruthless man who is determined to make the Bank of Japan independent from the Ministry of Finance.
This time he wanted to make the Ministry of Finance a "henchman" of his economic policy, and he wanted to lead the Bank of Japan to start suppressing inflation.
So, less than a month after taking office, he began to formulate a series of policies to reduce inflation.
The first was another yen interest rate hike at the end of December, from 3.75% to 4.25%.
It looks like the rate hike will be the same as before, only around 0.5%.
But please note that it has only been two months since the last rate hike.
There have been three consecutive interest rate hikes in the past six months, just like the rapid and fierce interest rate cuts in 1986. The Bank of Japan's operations are still impatient.
In addition to raising interest rates, the Ministry of Finance also cooperated and introduced a series of policies to restrict financial investment.
For example, it stipulates requirements for controlling the total amount of financial loans, and major commercial banks must increase the intensity of financial loan review.
With the introduction of this series of policies, not only the Beidu Bank, which had been on guard for a long time, but even many credit institutions felt something unusual.
However, beautiful dreams are fascinating, and not everyone is willing to wake up from this vanity.
These credit institutions, including many banks, are reluctant to link the Bank of Japan's interest rate hike with the stock market.
Are they slow to react? Do they really not see the connection? Or is it not that they can't think of it, but that they dare not think of it?
Although we know that running a red light is dangerous, we are not afraid if we run the red light together hand in hand.
As a result, people nowadays have not paid any attention to the impact of the Bank of Japan's interest rate hike policy, and are even discussing whether the Nikkei index will break 50,000 points next year.
However, it’s not that no one has noticed the current bubble in Japan. Economist Yukio Noguchi wrote in a financial newspaper that "the current rise in land prices is a bubble."
But his advice fell on deaf ears in Japan, and many economists criticized it fiercely.
Nomura Securities even placed advertisements in media around the world to refute the doubts that "Tokyo stock prices are too high."
Almost the entire Japanese securities industry believes that "there is no gravity in the stock market in Japan."
Of course, not everyone listened. The current Minister of Education, Culture, Sports, Science and Technology, Gentaro Nakajima, was very smart and started to sell off all the stocks and securities under his name.
Because of his close relationship with Shirakawa Feng, he was able to learn a lot about the inside operations of banks and securities institutions.
He has always been puzzled by the conservative business practices of Kitato Bank and its affiliated securities institutions.
He also asked Baichuan Feng in a roundabout way why he acted this way, and the latter usually dealt with it by saying "just to be on the safe side".
However, when I saw the warning from economists in the newspaper today, I thought of the abnormal behavior of other domestic financial institutions and companies.
In particular, these financial institutions are busy dealing with a large amount of non-performing loans in addition to stocks.
Gentaro Nakajima realized that the various corporate governance measures that had previously been effective had basically lost their effectiveness.
He was so frightened that he broke out in a cold sweat, and suddenly realized that Japan was going to be in big trouble.
