Would you buy a car that only goes 100 miles (160 km) on a tank of fuel?

That’s the range of Nissan’s 5-seater electric car planned for sale in the U.S. and Japan in 2010 – a similar size to Nissan’s Primera or VW’s Golf.

A full tank in a petrol-driven car will take you around twice that distance so the new technology that Nissan hopes will leapfrog current hybrids won’t be for those who disappear up the mountains each weekend.

But 90 percent of car users drive less than 100 miles each day, says Andy Palmer, Nissan’s senior vice president and head of product planning.  So if you’re OK with a town or city run-around, you can plug it in to recharge once you get home.

And future generations will have more range, Palmer told the Reuters Japan Investment Summit, as battery technology improves.

Nissan has the car under wraps until it unveils a final prototype on August 2. Palmer says driving it is quite a surprise — with torque akin to a 2-litre gasoline engine and acceleration with zero noise.

But lack of noise has itself become an issue. If other drivers and pedestrians can’t hear you coming, how can they stay out of the way?

That, Palmer says, is relatively straighforward to fix.

“Starting with zero noise, it’s very easy to add noise. Normally automotive engineers have the opposite problem.”

Annoying beeps are probably out, so what would you like your new electric car to sound like?

Photo credits: REUTERS/Gil Cohen Magen and REUTERS/Kim Kyung-Hoon

Japan’s population has peaked and all the projections have it sliding sharply in coming decades, raising questions about investment opportunities when emerging markets, in particular, offer much more obvious growth opportunities.

By 2055 government researchers expect Japan’s population to slide 30 percent to below 90 million from around 128 million with mushrooming numbers of retirees to be supported by a dwindling workforce.

Yet Japan will still be an important destination for world investors, argues Hiroyuki Arita, the Japan head of Blackrock, the world’s largest money manager.

Women, having not made such a big move into jobs as elsewhere, will cushion the decline in the Japanese workforce by taking up more jobs, he says.

Arita also sees Japan as a continuing oasis of stability in an increasingly volatile world.

Yes, there may be more growth in China and other emerging markets. But where will investors feel their money is safest if Eastern Europe, parts of Asia or other less stable areas suffer a meltdown?

The Japanese yen is already a safe haven for investors in tough times, although Japanese stocks have proven less of a refuge with a record 42 percent drop in the Nikkei share average last year.

Yet, Arita acknowledges that Japanese investors are struggling to have confidence in investing, never mind attracting others to view Japan well.

The hammering of world markets has turned Japanese people even more into a land of savers, rather than investors, Arita told the Reuters Japan Investment Summit, and that might take five years before venturing out from safety to invest again.

Japan’s people have around $15 trillion stashed away in overall savings, and asset managers have struggled to get their hands on it.

But Arita has hopes of grabbing more, once memories of the global financial crisis fades. He sees room to double or triple the current funds under management to around 200 to 350 trillion yen (around $2 billion to $3.5 billion) from just 50-90 trillion yen now.

 Photo credit: REUTERS/Issei Kato

Nomura’s takeover of Lehman Brothers’ European and Asia businesses is yielding results, and concerns the Japanese bank will struggle to marry cultures is misplaced, according to the man who drove the deal.

“It’s a very successful start and we’ve been happy with what we’ve got,” Takumi Shibata, chief operating officer for Nomura, told the Reuters Japan Investment Summit in Tokyo.

“We are finding surprisingly little differences between Lehman in Asia and Europe and Nomura in Asia and Europe. It was a marriage of two multicultural organisations, and both Lehman Brothers and Nomura aspire to be houses with a collegiate culture.”

Nomura had kept most of the Lehman staff it wanted to, has learnt from past international expansion mistakes, and was winning back business lost in the aftermath of the deal, he said.

It was number three in London equities trading in June, for example — from “nowhere” in December and number 8 in May.  Lehman had been number one before its collapse, however. “There’s no guarantee that we will go back to number one, but we want to be,” he said.

Nomura is also hiring bankers to beef up its U.S. presence, and is applying for an equity license in Australia and looking for a partner in China.

Photo credit: REUTERS/Issei Kato

Hiroshi Watanabe, president of the Japan Bank for International Cooperation, saw his share of dollar buying intervention during decades at the nation’s finance ministry.  But the market veteran says despite prevalent talk recently, a shift away from the greenback as the world’s reserve currency may be great in theory, but like the language of Esperanto short on daily practitioners.

“Esperanto is a very good language, but no community uses it in its daily life, ” Watanabe told the Reuters Japan Investment Summit.

“That’s the same situation that applies to the currency… I don’t see any other currency that can take the position to replace the key U.S. dollar.”

China, Russia and Brazil intend to push at this week’s Group of Eight summit for a new global reserve currency as an alternative to the dollar.

G8 sources say they do not expect serious debate by world leaders on the issue, which potentially could affect the value of trillions in dollar-denominated assets held by world nations, including China and Japan.

The euro, a basket of currencies like the IMF’s Special Drawing Rights (SDRs), or even the not-fully convertible yuan have been touted as future replacements.

Watanabe says this will not happen any time soon, although he notes a loss of dollar sheen. 

“The dollar should remain the key currency for the time being, but we have to admit that the dollar is over its peak,” he said.

“SDRs can be used for book-keeping the liability of an asset by the IMF of World Bank… but in the case of settlement, it is not so easy to use that kind of hypothetical unit.”

 Photo credit: REUTERS/Toru Hanai

Japan’s takeover rules are destined to be shaken up — but probably not for some time.

The government wants to adopt Britain’s takeover rules rather than base policy on the U.S. model.

Hiroaki Niihara, director of the corporate system division at the Ministry of Economy, Trade & Industry, told the Reuters Japan Investment Summit that current rules make it too easy to defend against approaches and are bad news for minority shareholders.

A “poison pill” takeover defence by Bull-Dog Sauce Co in 2007 showed up shortcomings, he said.

But change will take time. METI has been in talks with Britain’s Takeover Panel, the body that oversees Britain’s takeover policies, whose members are market practioners.

The Panel recently delivered 10 boxes of documents detailing how its oversight works to versight to METI, and getting to grips with the system is just the start of the process of change.

Niihara said he expects institutional investors — many of them with links to Japanese conglomerates — to oppose the plan. “I expect very strong resistance on their part,” he says.

Photo credit: REUTERS/Yuriko Nakao

After falling off a cliff at the start of this year as the global financial crisis gripped, mergers and acquisitions by Japanese companies overseas are likely to pick up again in the second half of this year, according to boutique Japanese M&A advisory firm Recof Corp.

There won’t be a flood of deals, Recof President Hikari Imai says, but the ones there are, are likely to be chunky as Japanese companies expand their frontiers beyond domestic markets where growth prospects are limited.

Geographically the focus is likely to be Asia — China, India in particular and possibly the Philippines or Australia. And the types of companies looking abroad will broaden as well, Imai told the Reuters Japan Investment Summit.

Recof expects Japanese power utilities, paper, food and beverage and retailing firms to look abroad at markets where they can put their advanced technology and inventory control systems to use.

The sort of companies that up till now have been focused on their home base. Driving all of this will be expectations of lack of growth in Japan’s own markets as it climbs slowly out of recession and its population ages — and saturation domestically.

So Imai reckons yen strength and the big drop in stock markets everywhere mean it may be an opportune moment for companies with overseas ambitions.

Photo credit: REUTERS/Yuriko Nakao

Japan is edging towards the introduction of independent directors and auditors for publicly listed companies, but so far even the idea of having someone from outside at the top of a company remains a foreign concept.

The tradition is for someone to join a Japanese company at age 22 with the ultimate goal of serving on the company board, says Takeyuki Ishida, the head of Japan Research at RiskMetrics Group, which advises institutional investors on how to vote their shares.

Such a tradition of insider appointments means that even if the government requires companies to appoint at least one independent director or an independent auditor — as a recent government discussion report suggested — it might be a classic case of Japanese “tatemae” (appearance) rather than “honne” (substance).

A reluctant company, faced with such a requirement, might ask their friendly bank or accounting firm to find someone for them — and end up with an ex-staff member, Ishida told the Reuters Japan Investment Summit.

Shareholder activism got a shot in the arm in Japan when foreign fund Steel Partners won a proxy battle in May over the management and directors of Aderans, a wigmaker.

On the surface, the activism has since gone quiet again but both Ishida and Jun Frank, from rival proxy advisory firm Glass Lewis & Co, say change is happening among investors in Japan.

While many investors still return empty ballots, leaving Japanese companies to decide how to vote their shares, the just completed round of annual shareholder meetings did see more tension, they both say.

Japanese companies don’t report in detail the results of board elections but both Ishida and Frank say they have heard that this year’s meetings saw higher protest votes.

Although the lack of disclosure of voting results, of course, mean there is no way for investors to see that for themselves.

Photo credit: REUTERS/Toru Hanai

A few years ago, domestic and international financial players were chomping at the bit to lure Mrs. Watanabe’s millions of yen or fellow Asians’ yuan, won or dollar holdings from their futons or equal-interest savings accounts.

The global financial crisis in the last year has sparked a rejigging of foreign institutions’ expectations about Asian wealth and their own ability to attract it, with some opting out of the game altogether.

Barclays Asia-Pacific CEO Robert Morrice isn’t letting his rivals’ woes temper enthusiasm.

He says the No.2 British bank will boost staff and its private banking arm, Barclays Wealth, expects to manage $20 billion in Asia outside of Japan by 2012, compared with $10 billion at end of this year.

“We see some very interesting opportunities in that space. We believe we’re still small and need to grow the business aggressively,” he told the Reuters Japan Investment Summit. “We need to be patient and pick our spots.”

India has been one of those, likely to hit $1 billion under management by the end of this year, while its overall staff there now number 7,000.

Photo credit: REUTERS/Toru Hanai

The conventional wisdom is that private equity is comatose in Japan, at best, with some major firms leaving Tokyo, deal numbers sliding and even old Japan hands like Advantage Partners seen as looking to exit mature investments.

Yet Richard Folsom, Representative Partner of Advantage, tells a very different story with deals in the pipeline, finance on tap and some ripe fruit about to be picked — even if his firm has yet to announce a new investment deal this year.

Private equity in Japan is just over 10 years old, after a rule change in 1997, and makes up about 3-4 percent of merger deals, by Folsom’s math.

That may seem low, but he says the private equity business in Germany and the United States was similarly small at the same stage of their development — suggesting fund buyouts might leap to 10 or 20 percent of deals over the next five or ten years as Japan follows the path set by others.

But he is not just talking theoretically. After the financial crisis made deals hard to value, he sees increasing pressure for hard-hit companies to sell non-core assets as competition increases pressure on them to raise cash to invest in their core businesses.

If they are not getting it from earnings and not getting it from the credit markets, that leaves them looking at divestments, he told the Reuters Japan Investment Summit. 

By his math, such deals as larger companies sell non-core units make up a third to a half of fund buyouts in Japan, but he sees potential growth in other areas too.

One of those goes directly to a big problem in Japan — a rapidly ageing population.

“There are a lot of founder-owned businesses that were founded in the 60s, 70s and 80s where the owners are now in their 60s, 70s and 80s,” he says.

Folsom says his firm is looking at 40 to 50 possible deals a quarter, most of them generated internally and a valuation gap — where asset sellers wanted to capture the prices they could have before the financial crisis — is closing.

We’ll be watching closely.

Photo credit: REUTERS/Toru Hanai

If the Nikkei’s spring rally from multi-decade lows whet appetites for a “Japan is back” soaring benchmark, it’s time to check that excessive exuberance, says Deutsche Securities’ Naoki Kamiyama, who sees a top of 10,500 yen for the Nikkei 225 and 1,000 for the Topix over the next year.

No one was expecting a return to 30,000 or even 20,000 for the Nikkei, which has found upside tough after a recent crack above the 10,000 line. But the veteran of many years of Japan asset-watching says market optimism is now meeting reality, with gains of less than 10 percent from current levels likely.

“Earnings are not on the rise, so the price-to-earnings ratio will remain high,” he told the Reuters Japan Investment Summit. “We’re at an important turning point where stocks have priced in a certain recovery, but the extent of that is not enough.”

After the worst year in Japanese trading history that drove the Nikkei down 42 percent amid a global financial crisis that left far greater carnage than just equity prices, a relatively moribund Nikkei seems a minor concern. But there are some buys out there, Kamiyama says.

He thinks financials may outperform with recovery in the sector, along with exporters, which will enjoy a mildly weaker yen. Not surprisingly, resource-linked firms will remain in favour, as world demand rekindles.

So if Japan’s market is capped, what is the strategy if global recovery does emerge? Buy Japanese exporters, shippers and trading firms now, then switch to China plays once a more pronounced recovery is confirmed. And — unlike the Nikkei – be aggressive.

Photo credit: REUTERS/Yuriko Nakao