(Sinopix/Rex Features)
March 11, 2010
Leo Lewis, Asia Business Correspondent, From The Times
Japan's popular pachinko parlours are looking forward to a boost from fathers enriched by government benefits for their children
Japan's gambling industry is expected to be an unlikely beneficiary of a national child subsidy scheme, which aims to shower parents with cash and encourage young couples to start families.
Pachinko parlours — the cacophonous pinball arcades that claim about 23 trillion yen (£171 billion) in illegal gambling revenues every year — are expected to perform especially well. The monthly family benefit payments are perfectly suited to fuel a couple of hours' play.
Several sectors of the Japanese economy are tipped to benefit from the Y2.2 trillion programme, through which families will receive payments of Y13,000 (£97) every month for each child if the new Government is able to push its much-vaunted programme through parliament.
Payments will rise to Y23,000 a month in the second year of the scheme as part of the Government’s effort to demonstrate that the State will permanently be on the side of families and childrearing.
The past two decades have witnessed relentless declines in the Japanese birth rate, prompting a range of demographic concerns, from a lack of elderly care provision to long-term fiscal catastrophe.
The sectors associated with the child subsidy scheme that have already attracted investors' attention include obvious beneficiaries, such as makers of children’s clothes, baby goods and private educational establishments.
Theme park operators, Nintendo and other toy and videogame makers also appear in the “benefit basket” of stocks that could gain as parents finally have the cash to succumb to their children’s nagging.
However, in a note to investors, Daiwa Securities analysts also point out the reality of what happens when governments suddenly make generous cash payments, especially if the subsidy money is paid into the father’s bank account. Because the money is not disbursed in the form of vouchers, Daiwa says, the child allowance represents a “hidden” bonus for the gambling industry.
Largely because of the legal grey zone in which they thrive, pachinko parlour operators are not listed on the stock exchange. The producers of the machines, however, are tipped to perform strongly. Stocks of Heiwa, Sankyo, SegaSammy and Aruze all appear on Daiwa’s list of “stocks to watch”.
The filter-through of stimulus cash to the pachinko parlours has historical precedent. Last April, the Government’s wider stimulus programme involved £140 cash handouts to families and was intended to trigger general spending across the retail and services sector in Japan. Pachinko stocks were the best-performing equities in the market over the following six months. In 2007, pachinko revenues are thought to have surpassed those of the entire Japanese restaurant industry.
Other analysts have questioned the wisdom of the child subsidy proposal. Research by the Kansai Institute of Social and Economic research found that only slightly more than half of Japanese were positive about the idea and more than a third intended simply to churn any cash they received into savings or paying-off loans. Of those who said they would save the money, 37 per cent said they would actively save it for their children’s future.
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