Vol.35 - VENTURE COMPANY FILE: NUMBER ONE

**CONTENTS**

-From the Editor
-Forex Weekly
-Yen Watch
-Events
-Job Watch
*Please scroll down below to read the disclaimer*

FROM THE EDITOR

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VENTURE COMPANY FILE: NUMBER ONE

This is a new series of articles, covering innovative new companies in Japan, which I believe will do well and list publicly. Many of these companies are approachable directly by both interested investors and prospective business partners, and we encourage readers to make enquiries wanting to make contact to do so through the foreign liaison team at TNP Partners (see contact details below).

Note that we do not endorse any of the firms mentioned.

PI R&D Company Limited

Industry: Chemicals
Specialty: Production of Resins
Location: Kawasaki

PI R&D is an early stage chemicals producer which specializes in producing polyimide resins. The company was started by Hiroshi Itatani, who has a PhD in Chemistry. Itatani has created a new class of Polyimides by discovering a way to add an extra receptor molecule into a standard Polyimide compound. Through this receptor, other molecules can be attached to change the physical characteristics of the resin, making it harder, more flexible, light sensitive, highly insulative, etc.

Itatani’s innovation has allowed PI R&D to so far develop about 900 new resin compounds, from a possible superset of about 2,000 possible combinations. Of these, PI R&D has been able to successfully identify 5 compounds which have high commercial worth. For example, one is light sensitive and can be used as a replacement for circuit board photoresist – used to etch printed circuit boards in electronic products. The new compound has unique qualities which allow a manufacturer to reduce the number of exposure-etching steps from 5 to 3, making circuit boards about 30% cheaper to produce. Considering there are billions of circuit boards are made worldwide every year, this is a very significant market. PI R&D is already delivering small orders of this product.

Another compound has the quality of being able to bend more than one million times before breaking, as well as having highly insulative properties. This makes the compound ideal as a resin base for flexible copper cables found in notebook computers, clamshell cell phones, and similar folding products.
The company has already started producing small but commercial quantities of two of the compounds described above, and in June 2005 completed a full scale factory to produce 150 liters a day of the photoresist compound for the Japanese domestic electronics market. Manufacturers are so eager to use this product that the entire production of photoresist has been back-ordered for the next 12 months from orders from just two major printed circuit board makers in Japan. Other customers wait in the wings for PI R&D to further step up production.

More information about PI R&D is available from Yutaka Shibata, Manager of Corporate Communications at Tsunami Network Partners. TNP is one of Japan's largest independent venture capital funds and is invested in over 35 early-stage companies with technology and innovative business practices comparable to that of PI R&D.

Terrie Lloyd
・・・Investor in Training/

FOREX WEEKLY

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Team Tokyo Forex Weekly
November 17, 2005

Low Yen, High Stocks.

Low Yen, High Stock Prices: Japan and the Asian Economy. With the yen recently dropping to a 27-month low and the Tokyo stock market high, what accounts for these seemingly conflicting trends? I scripted an Audio Interview from NHK's World Weekly Audio cast with guest: Eisuke Sakakibara (Professor, Keio University.)

Nov.16,Wed.
The Japanese economy is continuing to rise and it is a structural recovery. Japanese corporate balance sheets are looking much better than 15 years ago. The average Japanese corporation is in better shape than the average U.S corporation. Major restructural reform throughout the 90's has contributed to this.

The boosted Chinese economy has had complementary effects for the Japanese economy. It is a win/win type of situation with vast production of exports going to China. Japanese exports have exceeded US exports to China and Hong Kong. Japan is providing high quality materials and components to chinese production and assembling companies.

The rising stock prices will continue but the yen is down and the US dollar is going up. Foreign investors are heavily investing in the Nikkei, however because of the zero interest rate, investors appropriate money in the short term money markets borrowing yen and investing in yen, so it won't effect the exchange rate. Investors are investing heavily in foreign currency denominated assets because of the difference in the interest rates. The US is still raising and will reach 4.5 % .

That is why Japanese investors are investing in USD based markets because of the high return, this has nothing to do with the strenght of the Japanese economy. Japanese are investing in foreign currency denominated assets such as the EUR, NZD, AUD, CAD and the USD.

By 2006 the dollar will tumble in the summer due to the twin deficits and the zero savings base situation. Consumption in the US can not continue in the robust manner as now. The housing market bubble and the raising of the fed rates to 5% will likely materialize around the middle of next year. The dollar could weaken substantially quickly with a trigger. The Japanese econmy will continue to strenghten provided that Chinese growth continues at 8%. Japan is set to have a 3% growth rate in the next year or so. In terms of 2-5 years the Asian currency rates will strengthen against the US and Euro, but in the short term the U.S dollar will continue to grow over the next 6 months.

The November 18 APEC meeting will include discussions of the Yen and Yuan. China has already planned to increased domestic demand, and balanced export control on textiles. An Asian common currency unit is set to be favourable but not in the immediate future, however in the next 40-50 years as the diverse Asian exchange rates will be consolidated and this is going to be balanced out as market driven intergration in East Asian trade. We could see a form of common currency in the next 30 years.

However having said that the high growth of these growing Asian economies such as China and India will put pressure on resource consumption such as energy, food and water so sustained controlled development will have to be addressed.

At the New York close Wednesday 16th, 2005
GBP/USD 1.7179, EURO/USD 1.1679, USD/JPY 119.07, and USD/CHF 1.3242.
USD experienced no follow through on strong TICS, GBP new lows.
Forextv.com commentary.

After a slightly stronger start to the US trading session wednesday the USD weakened after the European close and traded in very tight ranges midrange through the IMM close at 2:00 PM CST. Traders remarked that the USD had ample opportunity to extend its gains today after the release of a surprisingly strong TICS number but remained inside established weekly ranges with the exception of the GBP. Cable finally broke to new 2005 lows after the BOE announced a disappointing inflation forecast, traders speculating that the BOE will not raise or lower rates through at least the end of Q1 2006. Cable weakness probably contributed to the firm tone in the other majors but some traders are finally conceding that the USD is looking tired・and sloppy・at this point; failing to make highs on TICS data was certainly widely noticed.

Traders are looking for a 4.5% fed funds rate by February 2006, a pause in the hike cycle is not widely expected before then. After Philly Fed Survey tomorrow the USD has nothing more to focus on for the week and pending any surprises in that data, it looks like the USD will remain firm for another week.

Team Tokyo Forex Weekly Hot Tip and Chart. USD/JPY dropped 30 points at opening on thursday morning and is fighting resistance. The USD/GBP to come up.
View Thursday morning's opening rates.

Editor : Jason Bainbridge
[email protected]

YEN WATCH

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Currency	11/7 Mon	11/8 Tue	11/9 Wed	11/10 Thu	11/11 Fri
USD	119.11	118.74	118.36	118.73	118.75
GBP	209.16	207.70	207.15	207.80	207.57
EUR	140.98	140.01	139.67	140.01	139.17
CAD	101.27	100.54	100.47	100.67	100.53
HKD	15.64	15.59	15.54	15.59	15.59
SGD	70.32	70.11	69.86	70.03	70.05
AUD	88.39	88.12	88.13	88.22	88.02

(The above TTS Exchange Rates has been brought to you by the courtesy of GoLloyds TSB)
The above rates were posted at 10:09 on Friday, November 11, 2005 and are valid for funds received before 3:00 pm on Friday, November 11, 2005. All funds received after 3:00 pm are remitted the following day at the following day's exchange rates. The exchange rates provided are intended only as a guide. The Bank reserves the right to apply a different exchange rate if the market is particularly volatile.

EVENT

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No events this week.

JOB WATCH

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Brought to you by DaiJob, Inc – providing jobs for bilinguals.

- Data Cabling Manager （Negotiable）
- Settlement Operation IT Manager (Negotiable)
- Bank Operations Processing Senior Administration Support (Negotiable)
- Equities & FI Settlement IT Analyst (Negotiable)
- Equity Derivatives Middle Office Trade Support (Negotiable)

Check out these and other jobs like these here!

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Disclaimer: This commentary is designed to help foreigners living in Japan understand the financial and investment opportunities available to them. It is NOT intended to constitute professional financial advice or an inducement to purchase the services and products mentioned. A condition of subscribing to this newsletter or reading this web site is that any actions taken by readers as a consequence of reading this column shall be the sole responsibility of the reader and no liability, implied or otherwise shall be assumed by Lloyd, Japan Inc. Communications, or other business entities related to either person.

© Japan Inc. Communications, 2005

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