Four themes guide our sector view –
capital, valuation, sub-prime, TOPIX
􀀗 We have upgraded Millea from UW to N,
and downgraded Mitsui from OW to N
􀀗 On valuation grounds, our top picks are
AIOI (OW) and Sompo Japan (OW), but
we struggle to find the catalyst to nearterm
outperformance
Capital king in 2008?
HSBC’s strategists are underweight Japan (see our 1Q Pan-
Asian Equity Strategy, Snakes and ladders, 7 January 2008).
Japan is HSBC’s least favourite market in Asia-Pacific,
although valuations are attractive, the downside is the poor
macro-economic outlook.
Our four themes for 2008 are capital, valuation, sub-prime
and TOPIX.
TOPIX will be key to re-rating rather than a straight
valuation argument.
Sub-prime and credit risk will likely weigh on Sompo,
Mitsui Sumitomo, and AIOI.
Capital will be king as unrealised gains on balance sheets
and investment earnings become eroded. Stocks supported
by share buy-backs will probably come under pressure.
Millea is the most strongly capitalized of the companies.

目录

Capital is king in 2008 3
Company updates 7
AIOI Insurance (8761, OW) 8
Millea Holdings (8766, N) 18
Mitsui Sumitomo Insurance
(8752, N) 30
Nipponkoa Insurance (8754,
UW) 40
Sompo Japan Insurance Inc
(8755, OW) 48
Disclosure appendix 62
Disclaimer 67
Contents