FirstFT: KKR plans push into Japan as yen hovers at 32-year low

Good morning. US private equity group KKR plans to boost its exposure to Japan, taking advantage of low corporate valuations and weakness in the yen to increase its investment in the country.

The New York-based investor, which manages nearly $500bn in assets including a $15bn Asian private equity fund, wants to invest more of the group’s own balance sheet directly into Japan and fast-growing Asian international hubs such as Singapore.

“Our commitment to Japan continues to go up, not only in private equity but in real estate, infrastructure and our credit business,” said Henry McVey, chief investment officer of KKR’s $25bn balance sheet, told the Financial Times in an interview.

“You’ve got attractive stock market valuations, investors have exited and now the country is enjoying the benefits of a cheap currency,” noted McVey, who expected to see an increase in public to private transactions. “[At] current valuations there are some really good businesses that have been dismissed by public investors,” he said.

It aims to benefit from the softness of the Japanese yen, which has lost more than a fifth of its value against the US dollar this year — sliding through ¥149 this week to a fresh 32-year low. Its fall reflects the yawning gap between the Bank of Japan’s ultra-loose monetary policy, and the tightening trend demonstrated by most other global central banks.

Thanks for reading FirstFT Asia. Here’s the rest of the day’s news — Emily

Five more stories in the news

1. Hunt lines up raid on bank profits UK Chancellor Jeremy Hunt is preparing to raid the profits of banks and energy companies in an attempt to fill a £40bn fiscal hole through a mix of tax rises and public spending cuts. Hunt’s Budget on October 31 is due to include big tax rises.

2. Goldman Sachs’ latest overhaul Goldman Sachs said it was pulling back from its foray into retail banking to focus more on its traditional strengths serving big corporations and wealthy investors as part of a major reorganisation under chief executive David Solomon. Solomon said the Wall Street powerhouse was trying to align its online retail bank operations with its wealth management business.

3. Foxconn aims to supply almost half of world’s EVs Foxconn aims to manufacture almost half of all electric vehicles sold globally, it said yesterday, as it launched two new prototype EVs. The iPhone maker has cornered 40 to 45 per cent of the world’s information and communications technology market, especially in personal computers and mobile phones.

4. Netflix shares jump as it gains 2.4mn new subscribers Netflix stemmed its subscriber losses in the third quarter, as popular programmes including the fourth season of Stranger Things and Dahmer — Monster: The Jeffrey Dahmer Story helped it add 2.4mn members. Netflix shares jumped nearly 15 per cent in after-hours trading.

5. Shares in South Korea’s BTS agency surge Shares in Hybe closed up 4.8 per cent yesterday after the South Korean entertainment and talent agency behind global pop superstars BTS said the band members would do their military service before getting back together around 2025 — revealing a shorter-than-expected hiatus for the seven-member boy band.

The day ahead

Asia-Pacific Economic Cooperation meets Finance ministers begin their three-day meeting in Bangkok.

Federal Reserve publishes its Beige Book The Fed today publishes its latest Beige Book, providing commentary on current US economic conditions, and there will be an update on the increasingly fragile American housing market.

UK inflation data Economists polled by Reuters expect the UK consumer price index to rise to 10 per cent for the year to September, from 9.9 per cent in August when it was just shy of a 40-year high.

Earnings Companies reporting results on Wednesday include Asos, IBM, Just Eat Takeaway, Man Group, Nestlé, Procter & Gamble, Rathbones Group, Tesla, Travelers and United Airlines.

What else we’re reading

China’s GDP data delay fuels concern for economy Viewed in some quarters as an attempt to avoid distracting from China’s biggest political event in years, the delay in releasing the country’s third-quarter GDP data came at a time when growth has become an uncomfortable topic in Beijing.

A hybrid pioneer, Toyota struggles to leap to electric Five months since Toyota started selling its first all-electric car to compete directly with Tesla, hardly any of them have been seen on the road. Toyota has spent much of the year under scrutiny for its lobbying against rules designed to encourage a shift to electric vehicles.

Plight of expat workers at KPMG Saudi Arabia For many western expatriates, the prospect of working in well-paid positions at KPMG Saudi Arabia is thrilling. But when the FT reviewed the circumstances surrounding seven departures from the company since 2018, many reported fearing for their personal safety, in particular when the terms of their exits were being negotiated.

Artist Shirin Neshat on the women-led protests in Iran With the nation in the midst of its longest-running demonstrations since the 1979 Islamic revolution, one of the most famous contemporary artists from Iran weighs in on the protests in her home country in this week’s FT Weekend podcast.

Israeli work permits offer relief to ‘exhausted’ Gaza economy Thousands of people in Gaza, where unemployment is close to 50 per cent, have applied for a permit to work in Israel in the past year. Israeli leaders, who have said the work permits are contingent on a calm security situation, last month increased the number by 1,500 to 17,000. For those lucky enough to get one, a permit can be life-changing.

Books

The Sri Lankan author Shehan Karunatilaka has won the 2022 Booker Prize for his genre-defying second novel, The Seven Moons of Maali Almeida. Neil MacGregor, the art historian and chair of this year’s judges, described the book, set in 1990 during the Sri Lankan civil war, as “an afterlife noir that dissolves the boundaries not just of different genres, but of life and death, body and spirit, east and west”.