Abenomics looks like solution in search of problem 1 Apr 2013 Japan’s prime minister plans to end deflation and push up the growth rate. But prices have been more stable than falling and GDP per worker is still rising. The shrinking population need not be a burden if Japan can deal with its debt load. Here, Abenomics is not radical enough.
Abenomics can clear Japan’s demographic hurdle 14 Mar 2013 Japan’s shrinking, ageing population is a challenge to Prime Minister Shinzo Abe’s plans to reinvigorate the economy. But it need not derail them. If more women and elderly people join the workforce, Japan’s annual GDP growth could still reach 1.5 pct a year over the next decade.
Samsung cash injection still leaves Sharp short 6 Mar 2013 The Korean giant is investing $111 mln in its cash-strapped Japanese rival. In return it gets a 3 pct stake and locks in a supplier of liquid crystal displays. The vote of confidence is important for Sharp. But with $11 bln of net debt, it needs more fresh equity to pull through.
BOJ chief could score early win by dumping rule 28 Feb 2013 The Bank of Japan’s self-imposed limit on government bond holdings is past its sell-by date. Haruhiko Kuroda, the likely next governor, could deliver a quick boost to monetary easing by dropping the restriction. Doing so would allay fears of a spike in long-term yields.
Why Kuroda is a better choice for BOJ chief 25 Feb 2013 The next central bank head will have to print money aggressively and defend a weak yen vigorously. ADB chief Haruhiko Kuroda’s diplomatic savvy and readiness to take risks make him a better choice than previous favourite Toshiro Muto, whose BOJ record did not inspire confidence.
Next BOJ chief should accept monetisation 14 Feb 2013 The Bank of Japan rebuffs any suggestions that it should directly finance fiscal deficits. But the central bank has already monetised $1 trillion of public debt. And investors don’t seem to care. The next BOJ governor should face reality, and crank up the printing presses.
Japan tensions rewrite China shopping lists 13 Feb 2013 Ongoing territorial spats seem to make China’s consumers and corporates more patriotic. Cars and travel were hit, and even China-to-Japan M&A fell by 93 pct in the last quarter of 2012. Consumers are now starting to forgive - or forget - but corporates may be slower to move on.
Interview questions for the new BOJ chief 12 Feb 2013 The Bank of Japan’s next governor will help decide the fate of Shinzo Abe’s anti-deflation campaign. Guts, diplomatic savvy and belief in the prime minister’s campaign will matter more than technical expertise. The following questions should help Abe choose the right person.
Tokyo stocks: this time could really be different 8 Feb 2013 Hopes are rising that Japanese equities will rediscover the capacity to deliver positive sustained investment returns. Such hopes have been dashed umpteen times past. But simple valuation measures suggest that, even after the recent rally, Tokyo stocks are worth buying.
Japan’s inflation worrywarts good for risky assets 6 Feb 2013 With Prime Minister Shinzo Abe stoking inflation expectations, the country’s pension fund won’t be the only one paring exposure to government bonds. Many Japanese investors will start shopping abroad. From Italian bonds to Russian roubles, riskier investments will get a boost.
Equity split from commodities may be short lived 4 Feb 2013 Japan’s money-printing rivalry with the U.S. has swept stocks to multi-year highs while commodities lag on worries about slow global growth. The outlook is fundamentally good for both these asset classes, though, as long as central-bank cash keeps flowing into the system.
Weak yen makes Japanese electronics firms giddy 4 Feb 2013 Panasonic shares jumped 17 percent after losses were less bad than expected. Manufacturers have been so badly beaten up that even small changes in profitability have a big impact on expectations. Revenue is still shrinking, though. The recent rally is largely based on hope.
Japan helps Nomura put a bad year behind it 31 Jan 2013 Scandals and resignations didn’t prevent the investment bank from delivering a 33 pct jump in underlying pre-tax profit in the last quarter. A recovering Japan helped. A scaled-back Nomura is starting to look consistently profitable. Now it needs to boost its return on equity.
IMF calls for stimulus, no, make that austerity 25 Jan 2013 The world is struggling for growth and the IMF is critical of both the UK’s austerity and Japan’s stimulus. But is the UK, with Europe’s biggest deficit, really austere? And will Japan’s stimulus stimulate? Fiscal and monetary policy cannot solve all the world’s problems.
South Korea may need a rate cut to fight weak yen 24 Jan 2013 Economic growth is anaemic and manufacturers like Hyundai are feeling the pinch. While a boost in fiscal spending may revive GDP, a looming currency war with Japan would take the fizz out of a much-expected recovery in exports. Lower rates could help to ease the pressure.
Ethical economy: The demographic effect 23 Jan 2013 From a narrow economic perspective, low birth rates are nothing worse than a minor nuisance. That is one lesson from Japan. But the rigidity of ageing populations could cause financial and political problems. For society as a whole, the new generation gap looks impoverishing.
BOJ must now make its bold inflation goal credible 22 Jan 2013 By adopting an aggressive 2 pct target for annual price rises, Japan’s central bank has joined Prime Minister Abe’s war on deflation. The open-ended promise of asset-buying will help. The next challenge is to convince markets that policy won’t be reversed abruptly in future.
Which weapon will BOJ choose to slay deflation? 21 Jan 2013 Japan’s central bank is poised to transform itself into a hyper-unorthodox monetary warrior. Whether its new role is convincing or not will depend on its choice of a clever battle plan. The BOJ has a number of choices in its arsenal, but some are more lethal than others.
Japan’s fiscal stimulus is call for action to BOJ 11 Jan 2013 New prime minister Shinzo Abe’s $117 bln spending boost is timely. The money the Bank of Japan will print to mop up the state’s extra borrowing should further weaken the yen. But targeting the exchange rate more directly would be a better option for Japan to end its deflation.
A how-to guide for Japan to escape deflation 10 Jan 2013 The nation’s new prime minister has promised to end falling prices. But raising the central bank’s inflation target may not suffice. Aiming for a sustained increase in the price level would be more credible. And a de facto currency peg may be better than more money-printing.