Bond jitters shouldn’t delay Japan pension reform 4 Jun 2013 Asking state funds to buy fewer government bonds when the central bank is struggling to control yields may look an own goal. But juicier returns should reduce the taxpayer’s exposure to future shortfalls. Besides more money moving out of Japan will help keep the yen weak.
Japan bond market blues: A guide for the perplexed 31 May 2013 The central bank is struggling to keep a lid on interest rates. Will rising yields choke Japan’s recovery and cause fiscal and financial panic? While the surge looks manageable for now, it’s a reminder to Prime Minister Abe not to neglect his remaining reforms. Our guide explains.
Memo to central banks: you can’t control markets 30 May 2013 The Fed, Bank of Japan and their peers are certainly influential. But the recent rapid rise of global bond yields is a healthy reminder of the limits to their power. Monetary policymakers don’t want a bond rout, but they will struggle to prevent one if investors lose confidence.
Nomura shows second tier isn’t always second rate 23 May 2013 While similar-sized peers pare back in fixed income, the Japanese bank has actually doubled its global market share since 2010. It’s even hiring. Success is part luck, part strategy. Nomura dodged much of the subprime crisis, and Japanese strength has suddenly come into its own.
Japanese stocks join the global risk parade 23 May 2013 The Nikkei’s 7 pct drop is an overdue correction: the index had risen by two-thirds in six months. What’s striking is that the selloff was sparked by concerns over U.S. interest rates and Chinese growth, not Abenomics. Being a haven for risk-hungry investors has its drawbacks.
Blame Japan’s debt on companies, not the state 23 May 2013 Perennial budget deficits have helped to offset corporate deleveraging. That explains why public debt is so high. If Prime Minister Abe’s policies revive private investment, the government’s track record suggests it will tighten its belt by raising taxes. Tokyo won’t go bust.
Japan’s yield spike is no canary in the debt mine 15 May 2013 Rising economic optimism has prompted a drop in government bond prices. Yet the cost of insuring against Japanese default remains low. Even if the country’s fabled Mrs Watanabes trim their holdings, the central bank’s bond-buying will keep Japan’s borrowing costs under control.
Dan Loeb’s breakup plan deserves Sony’s ear 14 May 2013 The U.S. hedge fund manager wants the Japanese electronics giant to spin off its entertainment arm. Activists rarely prevail in Japan. But Loeb’s idea may have merit. In the spirit of the country’s economic renaissance, Sony should take him, and other shareholders, seriously.
U.S. still beats Japan as threat to global system 14 May 2013 Bears say Japan’s mega monetary stimulus will end in default and a terrible recession exported worldwide. It’s a weak argument. Japan’s massive monetary experiment has doubled bond yields, to 0.9 pct. But the more internationally dependent U.S. is still the bigger worry.
Abenomics pulls Japan from its post-Lehman slump 13 May 2013 The prime minister’s war on deflation has scored some early triumphs. All but two components of Breakingviews’ Abenomics Index strengthened in March, taking the gauge to its highest level since September 2008. And that was before the central bank’s bold money-printing pledge.
Three-digit yen no longer a one-way bet 9 May 2013 The Bank of Japan’s money-printing promise has pushed the currency above 100 to the U.S. dollar for the first time since 2009. Prime Minister Abe’s radical plans point to further depreciation. But concerns about import prices and currency wars will counter any prolonged slide.
Dish’s pay-TV pain signals trouble for Sprint bid 9 May 2013 Weak quarterly results show why the company covets the telecom operator. But the poor earnings also show why Sprint shareholders should be skeptical of the $25.5 bln offer. Rival bidder SoftBank, which has just raised synergy estimates, now looks like an even better option.
SoftBank beating all comers in race for Sprint 30 Apr 2013 Dish’s $25.5 bln bid may look better on paper, but it actually falls short of SoftBank’s $20.1 bln proposal. The Dish pitch would pump up Sprint debt to levels so high that they could weaken the combined company - and leave investors holding a pay TV business poised for decline.
Japan lifts Nomura from its lost half decade 26 Apr 2013 A booming home market and cost-cutting helped the investment bank to its best year since 2007. Yet return on equity of 4.9 percent is still well below where it should be. The shares, which have doubled in less than four months, are asking a lot of Nomura - and of Abenomics.
BOJ’s Greek role model: Delphi or Odysseus? 25 Apr 2013 The Bank of Japan may raise its inflation forecast closer to its 2 percent goal. But wrong prophecies can bring discredit. Rather than trying to be Delphi’s oracle, the BOJ could mimic the Greek hero by tying its hands until the temptation to tighten policy too soon has passed.
Return to glory days may elude Japan’s automakers 24 Apr 2013 The falling yen will boost earnings and market share. But compared to 2006, Japan ships fewer cars abroad, margins are narrower, and U.S. rivals are no longer in a mess. Toyota’s market value is unlikely to overtake that of its eight main western competitors combined again.
Japanese workers need to go back to the 1980s 23 Apr 2013 Whether the Bank of Japan’s money-printing succeeds in engineering 2 percent inflation depends on wages growing by about 5 percent a year. Although Japanese workers haven’t seen such largesse for two decades, a weak yen and a tightening labour market could do the trick.
Toyota-isation of banking brings reputational risk 19 Apr 2013 Forget financial models derived from quantum physics. The solution to low returns in banking may be found in the car industry of 30 years ago. A production-line revolution replacing people with machines could drive profit in a low-growth world. But society may suffer for it.
IMF crowd should cut Japan some slack 19 Apr 2013 Prime Minister Shinzo Abe’s economic policies are in for a drubbing at the fund’s spring meeting. IMF officials bemoan Japan’s “risky” fiscal stimulus while America grumbles about the yen. But Japan, which is one of the IMF’s staunchest supporters, was right to act.
Japan cash exodus remains hope rather than reality 18 Apr 2013 The Japanese still aren’t dumping their soon-to-be-debased yen. Resident investors brought cash home in the week after the Bank of Japan fired its monetary bazooka. Either the locals don’t believe the inflation threat, or they are wary of foreign assets. The latter is more likely.