Toyota Motor Corporation (ADR) (TM), Lockheed Martin Corporation (LMT): Is Japan the Defense Industry’s Next Hot Spot?

Page 1 of 2

Despite a terrible end to the week, Japan’s NIKKEI 225 (INDEXNIKKEI:NI225) stock index managed to pull in small gains during the past five days. It’s the latest gain in what’s been a 31% year-to-date jump in the world’s hottest index, but Japan’s strong year has slowed recently. As the government looks to keep its unprecedented stimulus on track, tensions between Tokyo and rival Beijing are heating up in the Pacific.

Is the Pacific rivalry setting up the perfect storm for defense contractors in traditionally pacifist post-World War II Japan?

Japan and China square off
Japan and China have rolled out the big guns recently — or big ships, to be precise. The dispute between the two countries over the Senkaku Island chain has inflamed tensions between the governments and citizenries, resulting in an economic backlash. Auto giant Toyota Motor Corporation (ADR) (NYSE:TM) has certainly felt the effects, with its sales falling 3.5% year over year in China’s market in July. The drop has forced Toyota behind European and American rivals in the world’s largest auto market, and it has leading Japanese exporters and their investors worried about what the future in China holds.

Toyota Motor Corporation (ADR) (NYSE:TM)The two nations have responded to the growing rift by unveiling massive warships, something that’s done nothing to repair relations, but has made things interesting for the defense industry. After China unveiled its first aircraft carrier earlier in the year, Japan launched its own giant helicopter carrier this month — the largest warship in the Japanese fleet since World War II. China’s fired back once more by planning a series of live fire drills in the waters off of the Senkakus, and the standoff looks no closer to ending between these powers.

For a company like U.S. defense titan Lockheed Martin Corporation (NYSE:LMT), the opportunity’s something to watch. Japanese prime minister Shinzo Abe’s government has looked to bolster its domestic defense industry by partnering with foreign firms, and Lockheed’s expensive F-35 fighter is one of the top priorities for Japan’s Air Self-Defense Force’s future. The craft is still dominated by planned future U.S. sales, but Japan’s rising acceptance of a strong military could mean growing sales in the future.

Which other companies could benefit from a long-term Pacific standoff between the continent’s two largest economies? Missile and electronics manufacturer Raytheon Company (NYSE:RTN) is hoping to turn to Japan for future suppliers as the country considers nixing its half-century ban on arms exports. Japan currently utilizes only around 1% of its GDP for defense spending, far less than the likes of the U.S., but Raytheon already has ties to the country’s defense sector.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!