Aggressive Chinese and Japanese make a lucky chance

Aggressive Chinese and Japanese make a happy chance

Recently I have noticed that the stock price of Hitachi Metals [5486.T] is cheep, although the financial state of HM was pretty good. HM is making neodymium magnets which are essentially important parts of hybrid cars. As more ecological cars are sold today, HM’s earns more money. The last financial report showed that the net earnings jump up to 7 fold on 26th October, 2010.

Interestingly, the market responded to the news by the opposite way, I mean, the stock quate of HM sank on 27th October, the next day of the report release, and kept declining for three days. More than ten percent of the value was lost during the three days. The reason of the sharp drop is that Credit Suisse Securities changed the rating of the HT stock from “outperform” to “neutral”. Credit Suisse explained that all good news about HM has been released and no longer feel it attractive.

But can we depend on that?

Now 98% neodymium is mined in China and Japanese companies are getting neodymium from China. However, the government of China Republic wants to control the export of neodymium more strictly. Furthermore, Japanese manufacturers have encountered more problems during the last a few months. The export of rare earth materials have been delayed with more strict check by Chinese custom office. Although the HM’s neodymium stock is currently enough to keep the manufacture line of the neodymium magnets for months, this raised Japanese companies’ strong concern about stable supply of rare earth such as neodymium.
Some of Japanese nationalists are exciting and aggressive to discuss about the “invasion” of a Chinese activist to small isolands called Senkaku or Diayu which Japan and China claim as their own territory, and want to connect the rare earth matter with this border issue. Now radical activists and nationalists in both Japan and China are making strong demonstrations and shadowing the Tokyo stock and exchange markets.

This is it!

This situation is the worst for HM, and we can expect that it must never be worse. The neodymium matter will be dissolved soon. Some companies are now considering the restart to mine rare earth in the United States. Although many Chinese and Japanese people hate each other by their past histological matters, the governments and companies are smart enough to realize that the tight relationship between China and Japan is beneficial for both countries at least, now.

Thus, my conclusion is that this is a very good chance to buy HM stock just now!

Oh, one more thing.
We should not have the HM stock in the long term.
I strongly believe that Chinese are smarter and harder workers than Japanese, although I was born in Japan. So I would like to say that Chinese companies will make better and cheaper neodymium magnets soon.
When the HM stock blows up, we should sell it!
We don’t need to die with HM or Japan.