From the category archives:

Japan

Japan Weekly: BoJ Considers Additional Easing

11 March 2010

Last Friday, 5 March, a media report by Nikkei stated that the Bank of Japan (BoJ) is considering additional easing measures in March or April. According to the report, the BoJ may expand and/or extend the new fund-supplying operation introduced last December. We expect the actual outcome of the next policy meeting (on March 16/17) will be in line with the media reports. We expect that the BoJ would probably succeed in preventing a sharp appreciation of the yen if it takes the reported measures.

Japan Economic Daily (11 March 2010)

11 March 2010

The second preliminary report revealed that real GDP increased 3.8% quarter-on-quarter annualized in the final quarter of 2009, revised downward from a 4.6% QoQ annualized pace in the first print. The result was more or less in line with the market median projection of a 4.0% QoQ annualized climb and did not alter views about the economy. The main culprit for the revision was weaker inventory. Meanwhile, the downward adjustment in business investment was minimal.

Japan Economic Daily (10 March 2010)

10 March 2010

Private machinery orders excluding ships and power plants (private core orders) dropped 3.7% MoM in January after a 20.1% MoM jump in December 2009. The result was stronger than the market median projection of a 4.4% MoM fall. However, the headline number was depressed by orders from telecommunications which include mobile phone orders for consumers. Excluding this industry, private core orders increased 2.7% MoM in January after a 17.3% MoM surge in December. With production continuing to rebound, machinery orders have also turned around to positive growth, in our view.

Japan Economic Daily (09 March 2010)

9 March 2010

The coincident CI in January increased by 2.5 percentage points, rising for the tenth consecutive month. The government maintained the assessment of the coincident CI as “improving.” The rise of exports and the effect of the economic stimulus package have continued to boost the coincident CI.

Japan Economic Daily (08 March 2010)

8 March 2010

The BoJ is reportedly considering additional easing actions in the framework of the new fund-supplying operations including: (1) extending the lending period from three months to six months, and (2) increasing the total supply above ¥10tn. When the BoJ decided to introduce the new operation on December 1, 2009, the yen’s rising trend reversed and the stock market rose. This time, the impact from a new action on the exchange rate will likely depend on the extent to which short-term yen rates actually decline.

S&P On Japan’s Economic Growth: Increasing Focus on Political Fundamentals

8 March 2010

Standard & Poor’s (S&P) released a comment on March 2 titled, “Japan’s Lackluster Recovery To Continue In 2010”. S&P focused on the situation of the politics and commented that “the government plans to announce its midterm macroeconomic growth strategy and midterm fiscal consolidation policy by the end of June 2010. However, political dynamics may change the way such strategies are implemented.” etc.

Japan Equity Market: Strong Asian Growth and Currency Strength

5 March 2010

Major Points: Exports to Asia recovering rapidly; Exports to Asia recovering rapidly; Yen does not follow the renminbi higher; Exports of electronic components, autos, auto parts surging; Companies that are big beneficiaries of Asia demand include electronic component and electronic material manufacturers; We recommend Nidec and TDK among electronic component makers, Aisin Seiki among auto parts makers, and Nissan Motor and Suzuki Motor among automakers.

Bank of Japan to Consider More Easing Measures

5 March 2010

According to the Nikkei, the Bank of Japan began consideration of additional monetary easing steps. Specifically, in the current framework of new fund-supplying market operations introduced at the emergency meeting on December 1, 2009 (providing up to ¥10tn in three-month funding at a fixed rate of 0.1%), the Bank is likely to explore options including: 1) extending the lending period from three months to six months and 2) increasing the total supply above ¥10tn. Even if the BoJ goes ahead with the reported steps, we believe the effects on the economy and prices will be highly limited.

Japan February 2010 Domestic Auto Sales

4 March 2010

Overall February domestic auto sales (includes minivehicles) climbed 20.4% YoY to 458,228 units, marking the sixth consecutive month of growth. New registered vehicle sales (excludes minivehicles) increased 35.1% to 294,887 units, up for the seventh straight month. Minivehicle sales edged up 0.6% to 163,341 units, marking the second monthly increase in a row.

Japan: Fiscal Risk Behind Stable Long Term Interest Rates

4 March 2010

Japanese long term interest rates have remained stable at low levels although a fiscal risk premium has probably been mounting since September 2009. In this backdrop, the government revealed its provisional calculations on the future path of public finance last month. The government estimation shows that the goal of restoring fiscal health is achievable. But the government did not include any of the upcoming policies proposed in the DPJ manifesto. If these are included and our nominal growth projections are used, the ratio of government debt to nominal GDP will not only fail to stabilize in the mid-2010s but surge to 200% in fiscal 2019.

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