Thu, Feb 04, 2016 page15

• Economist reads sumo ads to gauge Japan’s sentiment

  • Bloomberg
  • • 
    • 
    • 

  When the giants of sumo wrestling prepared to step into the ring for last month’s grand tournament in Tokyo, Akiyoshi Takumori fired up his spreadsheet.

  For Takumori, an economist at one of Japan’s biggest asset managers, the ancient sport is more than entertainment: It is an eye into how successful Japanese Prime Minister Shinzo Abe has been at unleashing the country’s animal spirits.

  By counting the number of advertisements paraded before bouts — company names embroidered on Japanese banners and carried around the ring by a posse of men in kimonos — investors can gauge whether executives are bullish on the economy and willing to spend their companies’ cash, Takumori said.

  The 58-year-old is looking for any edge to assess the outlook for Abenomics, and more specifically its impact on the stock market. After a rosy first three years under Abe, with the Nikkei 225 Stock Average more than doubling, Japanese shares tumbled this year to their worst start on record.

  “The ads are like supplementary traffic lights to the main ones, regular economic indicators,” said Takumori, chief economist at Sumitomo Mitsui Asset Management Co in Tokyo. “If you watch them, you can tell whether the main lights will turn red or not.”

  So what signals are the sumo ads flashing? Last month’s tournament had 1,872 company-sponsored banners over the 15 days it ran, 5.4 percent fewer than the record 1,979 advertisements at the event in Fukuoka in November last year.

  That is still the second-highest on record, according to Takumori, who said people should not read too much into the drop.

  It was mostly due to popular wrestlers being out injured, he said.

  Japan’s TOPIX has also been buffeted by things outside its control. The measure has lost more than 9 percent this year, sucked into a global rout in equities caused by concerns about a slowdown in China and tumbling prices of oil and other commodities. The gauge closed 3.2 percent lower yesterday.

  “The numbers should’ve been good, but because of abnormal conditions, they look bad,” Takumori said of the drop in ads.

  Takumori began tallying the banners back in 1990 and soon discovered a correlation with GDP. In a recent example, when the number of ads tumbled in January 2012, GDP turned negative the next quarter.

  Keeping count at sumo gives him a two-month head start on broader advertising statistics published by the government.

  Each ad costs ￥62,000 (US$517), and companies must pay for at least one per day for the duration of the tournament, according to the sport’s administrator. Banners at the tournament represented everything from convenience store operator Lawson Inc to Suzusho Ltd, which makes beef jerky.

  All bouts are aired live on NHK, the public broadcaster. About a quarter of households around Tokyo tuned in on the competition’s final day last month, according to Video Research Ltd.

  “It’s not a big splurge, but companies wouldn’t be spending money on ads unless earnings were good” Takumori said.

  Operating profit at companies in the Nikkei 225 rose to a record in the quarter ended in September last year, as the weaker yen continued to buoy exporters while an influx of tourists boosted domestic firms.

  The quarterly Tankan index of confidence among big manufacturers also remained strong in December last year, but is forecast to fall next month, raising questions about whether firms will expand capital investment and raise wages.

  Takumori said he was disappointed by the drop in ads. He said he was expecting a new record last month, too.

  “It’s irritating,” he said. “It was unlucky.”
• Most Popular

  • 1

    Palmeiras hopes for club cup win

  • 2

    Taiwan to see nine extended holidays in 2026

  • 3

    Taiwan blacklists Huawei and SMIC

  • 4

    Ma Ying-jeou’s forum speech regrettable, MAC says

  • 5

    Barring of Chinese officials justified, MAC says