TOKYO -- It's well-known that Japan has an obsession with gadgets, especially mobile phones, which are a national pastime. In some wired circles, Japanese hip is determined by what model cell phone one carries. Does it have the flashiest accessories? A color screen? Instant Internet access? The right ringer sound?
All of these cell phone users -- nearly 60% of all Japanese carry a hand phone, according to
Nomura Research Institute
-- might get a little good news next week, when American and Japanese negotiators meet to discuss cutting access fees charged by
Nippon Telegraph and Telephone
, a former state-run telephony monopoly in which the government still has a 53% stake.
The talks, scheduled for Tuesday in Washington, won't necessarily produce immediate results, but an agreement may boost telecom stocks, which have room to rally. NTT has fallen 13% since mid-November, while rivals
, in which
both own a stake, and
have slid 13% and 18.7%, respectively, since December.
While fees have been cut over the past several years as foreign and domestic rivals start to undercut services provided by NTT, the U.S. government says that's not enough. It plans to press NTT to cut its access fees by 41% this year, arguing that cheaper prices will mean more users -- and profits. The Japanese government, on the other hand, only wants to slice 16.7% over three years. If NTT gives an oral agreement to cut fees by more than 17%, the telecom shares may rally.
A rally is distinctly unlikely, however, in the Japanese banking sector, where recent backtracking on reform by the government has depressed some investors' appetite for bank shares over the long term. (For more on this issue, see John Neuffer's story of
Liberal Democratic Party
said it would postpone introducing a consolidated tax plan until 2002 or later. The LDP also recently delayed lifting the blanket guarantee on bank deposits and has left pension fund reforms hanging.
Even the powerful business lobby
has denounced the LDP, saying the delays on legal reforms send a message that it is OK for corporations to move even slower on promised restructuring. For example, out of the $1.2 trillion nonperforming loans Japanese banks must shed, only $100 billion had been sold off as of December.
"If investors are to make money in major bank stocks this year there had better be some unrest. Without the right catalyst, these stocks are going no place this year," says James Fiorillo, analyst at
However, with restructuring thrown on the backburner for now, it looks like the
Bank of Japan
will be forced to maintain its zero short-term rate policy at its board meeting on Monday.