JOINT DCCJ & FCCJ LUNCHEON MEETING 20 JANUARY 2004
Theme:
"Japan is Back - from Investment Thesis to Macro Reality"

Guest Speaker:
Mr. Jesper Koll, Chief Japan Analyst, Merrill Lynch Japan Securities
RECAP
Jesper Koll sees China as a very important factor in the recovery of Japan. Japan has now a strong, and growing, trade surplus with China (incl. Hong Kong), whereas the USA has a substantial deficit. The restructuring of the companies has been successful - record high operating profitability plus a focus on scrapping tangible assets.

The profits recovery is now much broader than in the past, the domestic companies will from now on drive the profits growth. When the export industry was contributing to 63 % of the profit growth in 2003, it is estimated that the export would only be behind 23 % of the growth in 2005. The balance sheet recession is over, corporate Japan has paid back its bubble economy debts. In 1995-96 the corporate sectors interest bearing debts accounted for 125 % of the nominal GDP, now it is less than 90 %. Bubble-excess capacity has also been heavily cut during the last four years.

Mr. Koll also expects the deflation to turn into inflation. One important factor in this development is that the "Cold Money" will turn "Hot". Since 1994 the ratio of banknotes in circulation has risen from 8 % of GDP to almost 15 %. In EU the percentatge is about 6, in the US about 3. When this cash is mobilized, it would quickly close the deflation gap and create inflation.

Questioned about his views on the development of the Nikkei index this year, Mr. Koll expects it to rise to 13,000 and even hit 14,000 during some stage of the year. Regarding the yen, he predicted that it would go to 150 against the euro, but would not go below 100 against the US dollar.
IMAGES FROM THE MEETING
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The guest speaker Jesper Koll makes is point.
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A comment to the VIP table
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A FCCJ table at the meeting...
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...and a Danish one.
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Question from the audience...
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...and the response from Jesper Koll.
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The luncheon was attended by 50 members and guests from DCCJ and FCCJ
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