Mitsubishi UFJ Financial Group Inc
I
bought stock of Mitsubishi UFJ Financial Group (MTU) at US$4.79 on NYSE on 25 March 2011 and, recently, sold it at US6 on
13 February 2015. As a result, the profit, including dividend and transaction costs, is 33.1%.
About MTU
It is number 1 biggest bank in Japan in terms of its assets. It offers wide range of financial products and services. I am certain that it has a lot of ATM all over Japan – Japanese version of DBS. Many Japanese multi-national corporations are very likely to have bank account with MTU. So they need to transfer the monies in between headquarter and non-Japanese branch.
Rational of Investing in MTU
We can invest in MTU on either NYSE or Tokyo Stock Exchange. At the time of purchase, I didn’t have access to Tokyo Stock Exchange. Briefly, on NYSE, MTU is ADR (American Depositary Receipt) stock. ADR status indicates that the original foreign stock is owned by US-based bank and the same US-based bank issue stocks in relation to original foreign stocks in US currency. Clearly, I had only one option, which is to buy MTU ADR stock on NYSE.
At that time, almost all banks were unloved stocks. MTU was selling cheaply for so much assets which it can easily generate satisfactory return. It was clear that holding MTU stock is a comfortable ride for any value investors.
MTU was buying overseas banks to minimise the issues associated with limited earning power in Japan. Prolonged near-zero interest rate environment together with growing population of aged people are affecting negatively Japan on the long term basis. Thus, it makes sense that many Japanese corporations are looking to grow its revenues on overseas grounds.
During the Holding Period
When Abe became prime minister on the second time in 2012, Abenomic doctrine send many Japanese stocks on the bull ride. Consequently, MTU went to the highest stock price of US$6.90. Thereafter, the stock price progress was muted for a long time.
Overseas bank subsidiaries brought desired profit to MTU, replacing the shrinking earning power of traditional banking operation in Japan.
Rational of Selling MTU
I often wonder why MTU’s stock price doesn’t grow positively as much as similar foreign counterparts, say, Bank of America. Other than volatile exchange rate movement, I think I found the convincing reason, which may be relevant or may not be relevant. The reason is that Japanese is too strict on how much information is obtained on the application form to open bank account. Incomplete information, 99.9% or less, will render the application form to ‘rejected’ basket.
I came to know this when I was considering to open Japanese bank account with MTU for long holiday in Japan so that I can withdraw from ATM instead of carrying so much cash on my wallet. It certainly makes sense as Japanese have its reputation to ensure that all documentations are completed and properly authorised. As such, to open bank account, you need a ‘family name’ stamp and required documents. I have seen online that foreigners, who are working in Japan, have hard time to open bank account with Japanese banks. In Singapore, foreigners can easily open bank account with big 3 Singaporean banks.
Knowing this, I wonder how strict Japanese corporate culture fit in foreign banks, which MTU had acquired over years. These are why I lowered my expectation of the selling price I should sell at. If there is huge change in internal corporate culture in MTU in the positive way, MTU's share price should rise reflecting its globalised earning power.
About MTU
It is number 1 biggest bank in Japan in terms of its assets. It offers wide range of financial products and services. I am certain that it has a lot of ATM all over Japan – Japanese version of DBS. Many Japanese multi-national corporations are very likely to have bank account with MTU. So they need to transfer the monies in between headquarter and non-Japanese branch.
Rational of Investing in MTU
We can invest in MTU on either NYSE or Tokyo Stock Exchange. At the time of purchase, I didn’t have access to Tokyo Stock Exchange. Briefly, on NYSE, MTU is ADR (American Depositary Receipt) stock. ADR status indicates that the original foreign stock is owned by US-based bank and the same US-based bank issue stocks in relation to original foreign stocks in US currency. Clearly, I had only one option, which is to buy MTU ADR stock on NYSE.
At that time, almost all banks were unloved stocks. MTU was selling cheaply for so much assets which it can easily generate satisfactory return. It was clear that holding MTU stock is a comfortable ride for any value investors.
MTU was buying overseas banks to minimise the issues associated with limited earning power in Japan. Prolonged near-zero interest rate environment together with growing population of aged people are affecting negatively Japan on the long term basis. Thus, it makes sense that many Japanese corporations are looking to grow its revenues on overseas grounds.
During the Holding Period
When Abe became prime minister on the second time in 2012, Abenomic doctrine send many Japanese stocks on the bull ride. Consequently, MTU went to the highest stock price of US$6.90. Thereafter, the stock price progress was muted for a long time.
Overseas bank subsidiaries brought desired profit to MTU, replacing the shrinking earning power of traditional banking operation in Japan.
Rational of Selling MTU
I often wonder why MTU’s stock price doesn’t grow positively as much as similar foreign counterparts, say, Bank of America. Other than volatile exchange rate movement, I think I found the convincing reason, which may be relevant or may not be relevant. The reason is that Japanese is too strict on how much information is obtained on the application form to open bank account. Incomplete information, 99.9% or less, will render the application form to ‘rejected’ basket.
I came to know this when I was considering to open Japanese bank account with MTU for long holiday in Japan so that I can withdraw from ATM instead of carrying so much cash on my wallet. It certainly makes sense as Japanese have its reputation to ensure that all documentations are completed and properly authorised. As such, to open bank account, you need a ‘family name’ stamp and required documents. I have seen online that foreigners, who are working in Japan, have hard time to open bank account with Japanese banks. In Singapore, foreigners can easily open bank account with big 3 Singaporean banks.
Knowing this, I wonder how strict Japanese corporate culture fit in foreign banks, which MTU had acquired over years. These are why I lowered my expectation of the selling price I should sell at. If there is huge change in internal corporate culture in MTU in the positive way, MTU's share price should rise reflecting its globalised earning power.
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