2013/10/29 Darrel Whitten, Investor Networks 1

ファイト！ファイト！ファイト！ファイト！

ImpactImpactImpactImpact。。。。。。。。。。。。

。。。。。。。。。。。。Of The 2020 Tokyo Olympics and Your Business

**Business in JapanOctober 24, 2013 Event Presentation

2013/10/29 Darrel Whitten, Investor Networks 2

No Economic Miracle for Japan(Forbes, September 12, 2013)

Orwellian View: The Olympics Curse

• Current estimates of direct GDP impact only 0.6%~0.7%, or much lower than 1964

Tokyo and 1998 Nagano Olympics (3%-plus). Could easily be offset by strong yen, higher

energy costs or adverse reaction to VAT hikes.

• Pre-Olympic impact studies overstate the benefits. 1972 Munich, 1976 Montreal had big

losses, 2004 Athens pushed Greece toward economic collapse. Costs of hosting susceptible

to a) big cost over-runs, b) empty/unused venues, c) negligible tourism/ investment bump.

• Has historically been a big event for terrorists to target, requiring massive security,

traffic flow controls, etc., leading to some SME business failures.

• Virtually every Olympics host country since WWII saw its GDP growth drop – in some

cases, sharply – in year following the Olympics

2013/10/29 Darrel Whitten, Investor Networks 3

The Olympic Hangover- Growth Dips in the Morning After

Sources: The Guardian, Fidelity

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Disney-esk: Olympics as a Revival Catalyst

• Biggest impact will be on Japanese government, business, and consumer confidence over the next seven years.

• Successful Olympics will restore foreign investor confidence in Japan regarding its a) economic management and b) future growth prospects.

• Will force government to focus on early cleanup of the Fukushima Daiichi nuclear power plant

• Increased Japanese business and consumer confidence as well as foreign confidence in Japan means more spending.

• More spending means higher sustainable economic growth and a recovery in government tax revenues.

• Government tax revenue growth means greater debt sustainability.

Japan Gets its Mojo Back

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Capital EconomicsTotal spending of JPY720 billion, but excluding pre-planned capex, additional net JPY460 billion

(0.04% latest quarterly annualized GDP). Ignores consumption impact.

Tokyo Olympic Bid CommitteeTotal economic impact nearly JPY3 trillion (0.6%) of Japan GDP, some 157,000 new jobs (of

unknown duration), JPY278 billion personal consumption boost.

Nikko SecuritiesTotal economic impact of JPY4.2 trillion (0.8%). Is assuming a bigger

tourism, food and drink spend.

Daiwa SecuritiesOlympics could drive a major recovery in Japan tourism, with tourism

doubling from 5% GDP to 10% and contributing JPY95 trillion. Government

infrastructure investment would add another JPY55 trillion during the period =

total JPY150 trillion (cumulative 28% of GDP).

The Forecasts...- Largely ignore the indirect impact

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“We Can Make it if We Pull Together”• For the first time in modern history, Japan’s government and central bank are singing off

the same economic policy song sheet.

• First time in seven years. Japan has a stable government.

• Tokyo core infrastructure dates back to the 1964 Olympics.

• Japan is aware of the Olympics curse… “compact Olympics” concept to refurbish and reuse

where possible. Resale of Olympic village for residential use.

• Abenomics quickly gained traction

1. Sharp reversal in extremely strong yen

2.Record low bond yields despite massive debt

3.Green shoots of economic recovery, e.g., 3.8% GDP growth in latest quarter

4.Stock prices (Nikkei 225 index) up 62% from pre-Abe lows

" Japan has had 15 years of economic stagnation...

and we've lost confidence in ourselves. But I hope

this will be a chance for us to regain that

confidence..."

Shinzo Abe, Japan Prime Minister

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Who to Emulate?

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Pull Out All the Stops

• Most expensive Olympics ever. China estimated to have spent USD40 to USD 44 billion

on the Beijing Games

• Large amount of new construction. All 31 Beijin-based games venues. Renovation and

construction of six venues outside Beijing as well as 59 training centers.

• But… In terms of stage of economic development, more like 1964 Tokyo Olympics

• Four-year Olympic spend only 0.3% of China's total GDP each year

Beijing Olympics- Not the Model for the 2020 Tokyo Olympics

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Realistic Expectations- Pre-Olympic Euphoria Skewed Forecasts

- But economic impact was significant and

- There were demonstrable lasting benefits

Source: Credit Season co.uk

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Consumer Spending Detail- Shows Broadly-Based Benefits

Source: Confused.com

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Buying the Buzz• BoA Merrill Lynch Japan Olympic Bid Index (20 stocks), such as

- Oriental Land (Disyneyland Operator)

- Mizuno, Asics (Sportswear)

- Dentsu (Advertising)

- Secom (Security)

- Kajima, Taisei (Construction) ***Already seeing profit-taking- Taiheiyo Kogyo (Cement)

- Mitsubishi Estate, Mitsui Fudosan (Condominiums) ***Immediate uptick in condo sales、、、、but VAT hikes a negative

• Currency of Olympic host nations tends to appreciate ***Not desirable

• Property prices of Olympic host nations tend to appreciate ***Property agents beating the drum

Investor Speculation- Rally Long over Before the Olympics

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• The Tokyo Olympics will go a long way in restoring Japanese confidence in their future.

• The economic impact could well be bigger than current conservative estimates.

• The event will generate broadly-based business opportunities.

• But…the Government isn’t about to go overboard and over-spend on the opportunity.

• ….And neither should you