Japan’s trading desks: ‘Situation normal’, BAU or AFU? | FT Alphaville

Japan’s trading desks: ‘Situation normal’, BAU or AFU?

What is wrong with this picture?:

  1. Most major investment banks and brokers, including JPMorgan, Morgan Stanley, BarCap, Goldman Sachs and UBS in Tokyo still insist it’s ‘business as usual’ in the wake of last Friday’s massive earthquake and tsunami in Japan.
  2. Meanwhile, amid growing fears of a full-scale nuclear meltdown at the crippled Fukushima nuclear power plant in the quake zone, embassies on Thursday — including the US, UK, French and Italian missions — announced they are arranging charter flights to fly out nationals from Japan.
  3. The embassies’ moves added to a panicked e exodus of expats — and increasingly, Japanese — from Tokyo on planes, or else trains, to cities west of Tokyo such as Osaka, Kyoto and Fukuoka.
  4. Throughout Tokyo, people are bracing for power cuts amid signs of panic buying, food shortages, disruptions to public transport, cancellations of most major events and temporary closures of businesses.
  5. Many big companies — and nearly all foreign non-financial companies, including manufacturers, professional services, retailers have closed for at least a week or until further notice, or else told staff to work from home. Some — particularly foreign companies — have arranged for staff to relocate temporarily to centres outside Tokyo, such as Osaka, Kyoto and Fukuoka.

Business as usual?!

Clearly, as Friday’s extraordinary G7 intervention to weaken the yen showed, it’s anything but “BAU”. Nothing is ‘usual’ about what is going on in Tokyo — except that the markets are open and banks are functioning (apart from some glitches at ATMs).

But the big banks and brokers won’t be budged.

There is money to be made, especially over the past week of intensely volatile markets, with rumours of huge gains — as well as losses — this week as stocks, bonds and the currency saw huge swings. One trader at a UK investment bank in Tokyo said his trading desk (as well as others) made more than 10 times as much money this week. In fact, the Japanese government itself probably invited some action in markets with its stern warnings last Sunday it would fight yen speculation.

Needless to say, many staff working for the big banks and brokers are not particularly thrilled to be among the last ones left standing in Tokyo — even though top managers and traders may be already dreaming of even bigger, fatter bonuses at the end of what will be an extraordinary year.

It is a scary thing to be sitting in a city where embassies are evacuating staff and issuing warnings about radiation dangers and further earthquakes. It is even worse to come home at night (if you can get home without encountering transport problems), turn on the TV and see endless images of queues at airports, devastation up north, and  stricken nuclear plants.

That is why many of the big foreign banks are now flying in senior managers from regional hubs such as Singapore and Hong Kong. In the case of Goldman Sachs and JPMorgan, senior execs are coming from as far as New York. Goldman is known to have brought several senior personnel from New York this week to stride the floors, pat people on the back — metaphorically if not physically — and generally dole out sympathy and praise.

Not only that. Goldman has been feeding people and helping them with transport, laying on buses for those who commute and providing bento, or boxed meals. JPMorgan, which has even told staff it can sleep over in the office if they need to, might go even further, reported Deal Journal, saying CEO Jamie Dimon himself might grace the Tokyo office with his presence.

At least, we don’t think any of these top bankers will have any problem getting hotel reservations or seats on flights to Tokyo.

Related links:
The situation in Tokyo – a view from the ground – FTAlphaville
In-depth: Japan earthquake – FT
Martin Wolf – Japan can meet the earthquake test – FT