96-Year-Old Japanese Financial Company Announces Crypto Plans

Key Insights:

  • Nomura Holdings announced they would be digitally evolving with the Digital Company.
  • The company already has a footing in the digital services sector through the Future Innovation Company.
  • In the future, cryptocurrencies, NFTs, etc., will be Nomura’s focus.

Japan has been leading in the crypto space with preparing for its CBDCs and when it comes to cryptocurrencies in general.

The almost $1 trillion market crypto possesses in the country is now being tapped by major Japanese corporations. The newest among the mix is Nomura Holdings.

More Crypto for Japan

In a press release Nomura Holdings, part of the Nomura Group, discussed how they would be entering the digital asset market.

Established in 1925, the corporation is known for its broker-dealer, banking services, and emphasis on the securities business.

Thus after being a part of the financial sector for so long, the company understands the importance of the crypto industry.

Since their inception, cryptocurrencies have been blooming, and today they stand at the point where they have global influence.

The ongoing war between Russia and Ukraine is the best example of how crypto has become a means of aid and control there.

Sharing similar views, Nomura President and Group CEO Kentaro Okuda called their decision to be involved with crypto the next step in its digital evolution. He added:

“Digital technology is a critical part of our strategic drive to expand our operations in private markets. The new Digital Company will lead deeper collaboration among internal and external stakeholders, accelerate our uptake of digital technologies, and enhance our client services.”

The Digital Company will be a reorganized establishment of the already existing Future Innovation Company. The latter has been operating as a digital service provider for almost three years now.

Nomura plans on building upon this to develop the business further and improve its global collaboration.

Commenting on the prospect crypto presents the press release noted:

“Digital assets such as cryptocurrencies, security tokens, and non-fungible tokens are gaining presence as a new asset class. The fusion of innovations stemming from distributed ledger technology with traditional finance is giving rise to a new range of services. By tapping into this, Nomura aims to expand its private markets businesses and broaden its services in focus areas including sustainability and decarbonization.”

The Crypto Market Today

After the spectacular recovery of 12% witnessed two days ago, the market is currently in much better shape than it was a month ago.

By the end of January, the total market cap fell to $1.5 trillion but has since managed to rise back to $1.86 trillion as of today.

Regardless it didn’t stop many major Japanese corporations from jumping into crypto. FXEmpire last week reported on one of Japan’s biggest E-commerce firm Rakuten Group launching their own NFT platform.

In addition to this, last month, the country’s largest bank, MUFG’s trust arm, Mitsubishi UFJ Trust and Banking, announced their Yen-pegged stablecoin, the ‘Progmacoin’ as well.

Thus it’s safe to say that Nomura has a secure future in the crypto industry in Japan.

Wall Street Week Ahead Earnings: Alphabet, PayPal, Exxon Mobil, Meta, Qualcomm and Amazon in Focus

Investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks. Increasing Treasury yields and risk aversion will hit the stock market hard next week, making the big tech earnings that much more critical. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant to see how it impacts earnings in 2022.

Earnings Calendar For The Week Of January 31

Monday (January 31)

TICKER COMPANY EPS FORECAST
CBT Cabot $1.06
CRUS Cirrus Logic $1.91
FN Fabrinet $1.28
HLIT Harmonic $0.09
NXPI NXP Semiconductors $2.67
PCH PotlatchDeltic $0.48
RYAAY Ryanair Holdings $-0.15
SANM Sanmina $0.91
TT Trane Technologies $1.31
WWD Woodward $0.83

 

Tuesday (February 1)

IN THE SPOTLIGHT: ALPHABET (GOOGLE), PAYPAL, EXXON MOBIL

ALPHABET: The parent of Google and the world’s largest search engine that dominates internet search activity globally is expected to report its fourth-quarter earnings of $26.71 per share, which represents year-over-year growth of about 20% from $22.3 per share seen in the same period a year ago.

The Mountain View, California-based internet giant would post revenue growth of nearly 27% to $72.133 billion from $56.9 billion a year ago. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

“Key Alphabet (GOOG) ’22 Ad Buyer Survey conclusions: i) Google Search remains highest ROI platform; ii) YouTube expected to gain ad share ’21-’23; & iii) GOOG Search & YouTube are the top platforms for ad buyers reallocating budget due to iOS changes. We est. GOOG’s share of WW Digital adv. (x-China) goes from 41% to 37% ’22-’27. We extended model to ’27, PT to$3,500 vs. prior $3,360, reiterate Outperform,” noted John Blackledge, equity analyst at Cowen.

PAYPAL: The digital payments company is expected to report its fourth-quarter earnings of $0.86 per share, which represents year-over-year growth of about 15% from $0.75 per share seen in the same period a year ago. The San Jose, California-based company would post revenue growth of over 12% to around $6.9 billion.

EXXON MOBIL: The oil company will see its earnings rise multi-fold in the fourth quarter thanks to higher energy prices and a waning pandemic that helped it bounce back after a tough period in 2020.

The Irving Texas-based company is expected to report its fourth-quarter earnings of $1.73 per share, which represents year-over-year growth of over 5,666%, up from $0.03 per share seen in the same period a year ago.

The U.S. largest publicly traded oil company is expected to report a 97.3% increase in revenue to $91.845 billion from $46.54 billion a year ago. On Dec 30, the Irving Texas-based company in its regulatory filing said that higher oil and gas prices would enable it to achieve annual profitability starting in 2021 with an operating profit increase of up to $1.9 billion.

The U.S. largest publicly traded oil company hinted that oil and gas earnings could decrease by up to $1.2 billion as a result of one-time charges for asset impairments and contractual costs. Exxon announced late last year announced that a sharply higher operating profit in oil and gas, prompting Credit Suisse, Scotiabank, and JPMorgan to raise their fourth-quarter earnings estimates.

“Improving FCF outlook and dividend sustainability. With a more constructive commodity price outlook, lower capital spending, and additional cash operating cost savings, the dividend is covered in 2021 and averages >100% over the next 5-years on our estimates. Improving dividend sustainability supports yield compression for Exxon Mobil (XOM) relative to CVX,” noted Devin McDermott, Equity Analyst and Commodities Strategist at Morgan Stanley.

“Cost cuts defend the dividend. In 2020, Exxon Mobil (XOM) reduced 2022-25 spending plans to $20-25B from $30-35B (recently extended to 2027), improving dividend sustainability while limiting further pull on the balance sheet. Additionally, Exxon Mobil (XOM) is targeting $6B in structural operating cost reductions by 2023 which should put upward pressure on consensus FCF estimates.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 1

TICKER COMPANY EPS FORECAST
AMD Advanced Micro Devices $0.69
AMCR Amcor $0.18
ASH Ashland Global Holdings $0.93
CTLT Catalent $0.79
CB Chubb $3.34
EA Electronic Arts $2.81
XOM Exxon Mobil $1.73
GM General Motors $0.84
NMR Nomura Holdings $0.2
SBUX Starbucks $0.8
UBS UBS Group $0.24
UPS United Parcel Service $3.05

 

Wednesday (February 2)

IN THE SPOTLIGHT: META PLATFORMS (FACEBOOK), QUALCOMM

META PLATFORMS (FACEBOOK): The world’s largest online social network is expected to report its fourth-quarter earnings of $3.78 per share, which represents a year-over-year decline of over 2% from $3.88 per share seen in the same period a year ago.

The Menlo Park, California-based social media conglomerate would post revenue growth of over 30% to around $33.04 billion. The social media giant has consistently beaten consensus earnings estimates in most of the quarters in the last two years, at least.

QUALCOMM: The world’s biggest mobile phone chipmaker is expected to report its fiscal first-quarter earnings of $2.77 per share, which represents a year-over-year decline of over 40% from $1.97 per share seen in the same period a year ago.

The chip manufacturer would post revenue growth of nearly 27% to $10.45 billion. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

Qualcomm forecasts GAAP revenue in the first quarter of fiscal 2022 to be between $10 billion and $10.8 billion. On a non-GAAP basis, earnings will likely range from $2.90 to $3.10 per share, while GAAP earnings will likely range from $2.53 to $2.73 per share, according to ZACKS Research.

“After underperforming the SOXX for most of 2021 until a sharp rally late in the year, we see a strong setup for a now Apple-overhang-free Qualcomm in 2022 as investors begin to appreciate the diverse revenue drivers beyond Wireless. Expect solid print and guide, with focus on execution and growth in the connected intelligent edge and update our estimates accordingly,” noted Matthew Ramsay, equity analyst at Cowen.

“We reiterate our price target of $210 based on 17.5x our F2023 EPS estimate of $12.0 and our Outperform rating.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 2

TICKER COMPANY EPS FORECAST
EAT Brinker International $0.5
CHRW C.H. Robinson Worldwide $1.85
CPRI Capri Holdings $1.67
CTSH Cognizant Technology Solutions $1.03
RACE Ferrari $1.08
FB Meta Platforms $3.78
MET MetLife $1.63
TMUS T-Mobile $0.2

 

Thursday (February 3)

IN THE SPOTLIGHT: AMAZON

The e-commerce leader for physical and digital merchandise, Amazon, is expected to report its fourth-quarter earnings of $3.9 per share, which represents a year-over-year decline of over 70% from $14.09 per share seen in the same period a year ago.

However, the Seattle, Washington-based multinational technology giant would post revenue growth of about 10% to around $138 billion. The company has beaten earnings per share (EPS) estimates most of the time in the two years.

“We are reiterating our BUY rating and our price target to $3,900. Our price target is based on our updated discounted cash flow model, including our long-term adj. EBITDA margin forecast of 22.0% versus 13.7% in 2020,” noted Tom Forte, MD, Senior Research Analyst at D.A. DAVIDSON.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 3

TICKER COMPANY EPS FORECAST
ABB ABB $0.38
ALL Allstate $2.72
COP ConocoPhillips $2.23
LLY Eli Lilly $2.37
HON Honeywell International $2.09
PRU Prudential Financial $2.44
SU Suncor Energy $0.95
SYNA Synaptics $2.63

 

Friday (February 4)

TICKER COMPANY EPS FORECAST
APD Air Products & Chemicals $2.51
AON Aon $3.33
BMY Bristol Myers Squibb $1.85
CBOE Cboe Global Markets $1.41
ETN Eaton $1.73

 

How Will EU Ban on 10 Banks From Bond Sales Impact Markets and Banks?

Here’s what the move means for EU debt sales, bond markets and the affected banks:

WHICH BANKS ARE AFFECTED?

Banks from all corners of the world are affected: U.S. lenders JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. as well as British peers Barclays Plc and NatWest Group Plc are on the list.

In continental Europe, Deutsche Bank AG, Natixis SA and Credit Agricole SA and UniCredit SpA are affected. Plus Japan’s Nomura Holdings Inc.. All banks declined to comment.

All on the list of 39 primary dealers responsible for managing debt sales — syndicated and auctioned — for the bloc and managing its debt trading in the secondary market.

Many are Europe’s go-to banks in the public sector bond market; seven are among the top 10 fee earners from syndicated debt sales in this market since 2020, according to Dealogic.

WHAT DID THEY DO?

The ban relates to lenders found being part of three cartels in the past three years. One saw a number of banks fined over tinkering in FX spot markets between 2007-2013. Another one found a number of banks colluded on trading strategies and pricing between 2010-2015 on public sector bonds – debt issued by government-linked institutions. A third one related to a cartel of traders at various banks in the primary and secondary market for European government bonds.

HOW BIG WILL FEE LOSSES BE?

Sitting out from syndications, where investment banks are hired by an issuer to sell debt directly on to end investors, means losing out on lucrative fees. Banks netted 20 million euros – 0.1% of the 20 billion euros – in fees from Tuesday’s debut bond, according to Reuters calculations.

Fees vary with debt maturities; the longer the bond, the higher the fees.

An average of its fees across all maturities for the remaining 60 billion euros of this year’s long-term debt issuance would translate into a pool of another 66 million euros if all that debt were to be syndicated, Reuters calculations showed. Considering it will be divided among all banks participating, that’s a relatively small amount compared to the $224 million top earner JPMorgan alone reaped from syndicated European public sector debt sales since the start of 2020, according to Dealogic.

The EU also pays smaller fees for its recovery fund debt than European sovereigns. However, it currently issues all its debt through syndications and will rely on them much more heavily than sovereigns even after auctions start in September, meaning it is a fee source banks won’t want to miss out on.

Exclusion also means smaller lenders could see their fee share increase. Graphic: EU syndication fees: https://fingfx.thomsonreuters.com/gfx/mkt/azgvooddjvd/4Xyrm-eu-syndication-fees-for-recovery-fund-bonds.png

HOW LONG WILL THE BAN LAST?

No timeline has been given. EU Budget Commissioner Johannes Hahn said the commission would work through information provided by banks on how they addressed the issues “as fast as possible”.

Sources told Reuters some banks already submitted information, with the remaining ones expected to follow soon. This could mean some of the banned banks could get the green light to rejoin bond sales, the sources said.

A senior debt banker at a primary dealer not banned said he expects at least a few of the banks to be re-admitted by September, when EU auctions begin.

WILL IT HIT LIQUIDITY?

ECB bond buying has zapped some liquidity in the bloc’s fixed income markets. Liquidity matters to investors, making it easier and cheaper to transact.

Syndication fees are a key factor that motivate banks to participate in auctions that are much less lucrative but crucial to maintain liquidity.

European governments have lost primary dealers in recent years as banks have judged the business to be less profitable.

And having less major banks left to underwrite its syndications could also pose risks for the EU.

(Reporting by Yoruk Bahceli, Abhinav Ramnarayan, Dhara Ranasinghe and Iain Withers in London, John O’Donnell in Frankfurt and Foo Yun Chee in Brussels; writing by Karin Strohecker; Editing by Chizu Nomiyama)

 

Japan’s Nomura Still Betting on Global Expansion to Lift Profit, Despite Archegos Hit

By Makiko Yamazaki

Nomura now estimates 320 billion yen ($2.94 billion) in pretax income for its three core divisions in the year from April next year, citing strength in the wholesale arm, comprising global markets and investment banking.

The new target raises the bar from the 280 billion yen profit targeted in an estimate issued a year ago, and represents a 29% jump from the 247.6 billion yen it posted for the year ended in March 2021.

The raised ambitions come soon after the implosion of Archegos, a family office run by Bill Hwang that failed to meet margin calls on heavily leveraged stock bets, rekindled concerns about Nomura’s global expansion strategy.

Chief Executive Kentaro Okuda told a media briefing on Wednesday that Nomura has exited more than 99% of its Archegos-related positions and reiterated that it has no plans to shy away from the prime brokerage business.

But he added that the bank would reduce prime brokerage transactions that only provide credit using stocks as collateral.

The upward profit target revision is driven by a higher forecast for the wholesale division, which is expected to post a profit of 150 billion yen for April 2022-March 2023, more than double the 64.3 billion yen posted for the year just ended.

Earnings at Nomura’s wholesale arm, which includes overseas operations, have been highly volatile since its disastrous 2008 acquisition of Lehman Brothers’ Asian and European businesses, forcing the bank to repeatedly implement drastic cost cuts.

In an effort to expand stable revenue sources, Nomura now targets a 50% income growth in the advisory business and a 40% increase from private equity and private debt markets, which includes businesses with unlisted companies, over the next few years.

($1 = 108.7400 yen)

(Reporting by Makiko Yamazaki and Takashi Umekawa; Editing by Kenneth Maxwell)

Nomura Posts Biggest Quarterly Loss in Over a Decade on $2.3 Billion Archegos Hit

By Makiko Yamazaki and Takashi Umekawa

Japan’s biggest brokerage and investment bank said while it expects to book a further $570 million in charges related to Archegos this financial year and would be beefing up its risk controls, it saw the debacle as an isolated incident.

“We are not planning to make major changes to our U.S. and global business strategy,” Nomura CEO Kentaro Okuda told a media briefing.

Its January-March net loss came in at 155.4 billion yen ($1.4 billion). That compares with a 34.4 billion yen loss a year earlier when global stock markets were battered by the coronavirus pandemic.

Before Archegos failed to meet margin calls on heavily leveraged stock bets last month, Nomura had been on track for record annual profit, bolstered by a buoyant U.S. trading business. That was set to have been a hard-fought victory in its decade-long, stop-start efforts to successfully expand outside Japan.

Instead, it posted net income of 153.1 billion yen, down 29% from the previous year but a second consecutive year of profit. Most analysts had expected a profit of between 160 billion and 225 billion yen, according to Refinitiv data.

Nomura’s Archegos loss, which is slightly larger than a previously flagged $2 billion, is the second worst after Credit Suisse. The Swiss bank booked a 4.4 billion franc ($4.8 billion) Archegos hit in January-March and expects further losses of about 600 million francs this quarter.

Morgan Stanley lost nearly $1 billion, while Goldman Sachs Group Inc and Deutsche Bank exited without losses, Reuters and other media outlets have reported.

(Reporting by Makiko Yamazaki and Takashi Umekawa; Editing by Edwina Gibbs)