Japan’s Olympic boost will be mostly psychological 9 Sep 2013 Choosing Tokyo to host the 2020 Games has given the country a lift. But expectations that an Olympian investment spree will end deflation are as misplaced as fears that it will trigger a debt crisis. A feel-good effect on consumption is probably the best Japan can hope for.
Japan index: Wages and consumption stymie recovery 9 Sep 2013 Firmer prices, stronger bank lending and higher manufacturing output helped the Breakingviews Abenomics Index reverse half the previous month’s decline in July. But unless wages and spending rise, Prime Minister Shinzo Abe will struggle to win his war against deflation.
Not all Asian countries need to fear the Fed 5 Sep 2013 Plunging currencies have raised contagion concerns. But not all nations are equally vulnerable to receding tides of dollar liquidity. A Breakingviews interactive map shows that while no Asian economy is entirely immune, none is as badly exposed as India.
The lessons for China from Japan’s lost decade 3 Sep 2013 China faces many of the challenges that hobbled its Asian rival in the late 1980s: a debt-fuelled property boom, less competitive exports, and an ageing society. China is still urbanising and can avoid deflation, but only if it learns from Tokyo’s error by cleaning up its banks.
Why Japan’s corporate tax rate should remain high 15 Aug 2013 Prime Minister Shinzo Abe may ease the burden on companies to spur investment and offset higher sales taxes. But Japan’s 38 percent corporate rate isn’t as harsh as it looks, and the government needs the revenue. Temporary rebates would be a more prudent alternative.
Japan Index: A second setback for Abe’s experiment 8 Aug 2013 The Breakingviews Abenomics Index has fallen for a second successive month, hitting its lowest level this year in June. Japan’s jittery bond markets and sliding inflation expectations were the culprits. But other indicators still suggest the end of deflation is near.
Sony brush-off won’t end Dan Loeb campaign 6 Aug 2013 The Japanese group’s board has politely rejected the activist’s plan to spin off its entertainment arm. But Loeb isn’t backing down: he’s promising other value-creating ideas. Though his courteous tone is a departure from previous campaigns, Sony can’t afford to relax just yet.
Gift coupons could sweeten Japan’s sales tax pill 30 Jul 2013 A plan to double the country’s consumption tax is crucial to convince bondholders that public debt won’t spiral out of control. But the increased levy risks undermining Japan’s economic revival. Shopping vouchers would make the shift more palatable to consumers.
Nomura surge not all Abenomics 26 Jul 2013 New management deserves credit for a year of cost cuts, but the Japanese investment bank has certainly been helped by the huge monetary and fiscal stimulus in its home market. With such favourable tailwinds, it’s too early to tell whether Nomura is truly a changed beast.
New-age trade clubs: A guide for the perplexed 24 Jul 2013 With the Trans-Pacific Partnership, global trade is going private. Japan has joined economies as diverse as the United States and Vietnam in drawing up a new accord. It looks like fragmentation, but with sensible rules, the TPP could give the bigger WTO a new lease of life.
Time for victorious Abe to roll up shirtsleeves 22 Jul 2013 Turning on the money-printing tap was easy. But having won control of the upper house of Japan’s parliament, Prime Minister Shinzo Abe must now attend to the broken plumbing. Passing laws that make the economy more vibrant and public finances stronger are the priority.
Olympus $1.2 bln share sale fails zoom-lens test 12 Jul 2013 Tapping investors to cut debt and expand its medical unit makes sense for the scandal-hit Japanese company. But only selling shares overseas is a slight on local shareholders who endured the dark days. Besides, a close-up view suggests Olympus’s finances were already on the mend.
Dash from emerging to developed markets hits new risks 11 Jul 2013 Capital is being sucked from emerging markets, depressing both asset prices and growth. Developed-market equities are the new favourite. But Europe is in recession, U.S. growth is moderate and Japan’s stimulus may wear off. Investors are swapping one set of risks for another.
Edward Hadas: Get used to zombie economics 10 Jul 2013 Moviegoers know that zombies are neither really alive nor fully dead. The idea is also useful in demographics and economics. Although economic zombification receives little attention, its effects could be as important as monetary policy, fiscal deficits and structural reforms.
Japan’s dealmakers deflated by Abe’s arrows 9 Jul 2013 A volley of overseas mergers has come to a near halt since Japan’s new prime minister took over last year. Volatile markets and a weak yen are to blame. Still, financial groups with cheap funding seem undeterred, and the strong case for going abroad means others will follow suit.
Japan index: markets put speed bump in Abe’s path 9 Jul 2013 For the first time in six months, Japanese Prime Minister Shinzo Abe’s economic experiment stumbled in May amidst skittish stock and bond markets. But the drop in the Breakingviews Abenomics Index to 93.8, from 94.4 in April, may be temporary as deflation continues to ease.
Japan’s Thai bank swoop rests on special treatment 3 Jul 2013 MUFG’s $5.7 billion offer for 75 percent of Bank of Ayudhya depends on Thailand waiving its ownership cap. The Japanese group’s long presence in the country and close governmental links may be enough to prize open the door. Other bidders can’t count on the same reception.
Abe’s vote gamble is a welcome sign of reform zeal 28 Jun 2013 The Japanese prime minister will set up a commission to rethink a lopsided electoral system which favours rural voters. The move, which hurts Abe’s own party, will raise hopes of a similar step-up in the pace of economic reform after next month’s crucial upper house elections.
Dish refines guerrilla campaign against SoftBank 19 Jun 2013 The satellite TV company won’t up its bid for Sprint, paving the way for SoftBank to buy the U.S. telecom provider. Instead it’s focusing on winning a chunk of Sprint’s subsidiary, Clearwire. Dish’s switch in tactics may yet be enough to force SoftBank to sign a peace agreement.
Market jitters could crush Japan’s inflation drive 13 Jun 2013 A rising yen, falling stocks and lower government bond yields suggest investors once again view Japan as a safe haven. That trade only makes sense if deflation boosts real returns. The Bank of Japan may need to be bolder to prevent expectations from becoming self-fulfilling.