Japanese stocks have trounced their Chinese peers this year, but some investors are betting the tide is about to turn, Bloomberg reported. Headwinds are growing for Japanese equities, including deteriorating global growth and concern the era of yen weakness that has bolstered exporters’ earnings may be nearly over as the central bank comes under pressure to tighten policy. Conversely, optimism is building that Beijing’s efforts to bolster the economy and local equity markets will help end a slump that has made Chinese equities among the world’s worst performers this year.
Japan
Read more
Bank of Japan Governor Kazuo Ueda will continue to dismantle the central bank's ultra-easy monetary policy settings and look to exit the decade-long accommodative regime sometime next year, an inherently risky plan that would require skilful execution, Reuters reported. Ultimately, however, the BOJ chief's exit strategy will require a bit of good fortune too, especially given global uncertainties including the Middle East conflict and worries about whether the U.S. economy could achieve a soft landing as well as China's growth trajectory.
Read more
The Bank of Japan further loosened its grip on long-term interest rates by tweaking its bond yield control policy again on Tuesday, taking another small step towards dismantling its controversial monetary stimulus of the past decade, Reuters reported. While it kept ultra-low interest rates steady, the BOJ watered down its 1% cap on the 10-year bond yield which it set just three months ago to allow long-term borrowing costs to rise more.
Read more
Core consumer inflation in Japan's capital Tokyo, considered a leading indicator of nationwide trends, unexpectedly accelerated in October, a sign of broadening price pressures that may keep alive expectations of near-term end to ultra-low interest rates, Reuters reported. The data reinforces expectations the Bank of Japan (BOJ) will revise up its inflation forecasts when it produces fresh quarterly projections at next week's policy meeting.
Read more
After weathering decades of deflation and stagnant growth, Japan is seeing an investment boom that has made apartments in central Tokyo unaffordable for young Japanese professionals, Reuters reported. The flood of investment drove the average price for a new condominium in central Tokyo up 60% to a record 129.6 million yen ($865,000) in the first half of this year, according to the Real Estate Economic Institute. For locals, the surge in prices has made Tokyo the second most unaffordable city worldwide, only behind Hong Kong, according to a UBS global real estate report.
Read more
Japan's factory activity fell at the fastest pace in seven months in September, a survey showed on Monday, as worsening global economic conditions continued to weaken demand, Reuters reported. The final au Jibun Bank Japan manufacturing purchasing managers' index (PMI) fell to 48.5 in September from 49.6 in August and roughly in line with the flash reading of 48.6. The index has remained below the 50.0 point threshold that separates growth from contraction for four straight months.
Read more
Japan's Prime Minister Fumio Kishida unveiled on Monday the pillars of a new economic stimulus package to be compiled next month to help households ease the pain of price hikes and boost wages, Reuters reported. Kishida will instruct his cabinet on Tuesday to put together the package and swiftly set up an extra budget to fund it, he said. It will include measures to protect people from cost-push inflation, back sustainable wage and income growth, promote domestic investment to spur growth, reform to overcome dwindling populations, and encourage infrastructure investment.
Read more
Bank of Japan Governor Kazuo Ueda said there was "very high uncertainty" over whether companies would continue raising prices and wages, stressing anew the bank's resolve to maintain ultra-loose monetary policy, Reuters reported. He also offered a cautious take on the overseas economic outlook, warning of the fallout from aggressive U.S. interest rate hikes and sluggish growth in the Chinese economy. The key to the outlook for monetary policy is whether strong wage growth and consumption, rather than cost pressures from rising import costs, become the key driver of inflation, Ueda said.
Read more
Bank of Japan Gov. Kazuo Ueda, defying speculation about a near-term rise in interest rates, said Japan couldn’t yet be confident of sustainable inflation backed by strong wage growth, although prices are currently rising faster than the central bank’s 2% target, the Wall Street Journal reported. He said he planned to keep a benchmark short-term interest rate in negative territory for now—the same place it has been since 2016.
Read more
Japanese household spending suffered its biggest drop in nearly 2-1/2 years squeezed by rising prices, although volatility in some items meant the outlook might not be as gloomy as the headline figures suggested, Reuters reported. Japan's economy grew much faster than expected in the second quarter, helped by the end of COVID-19 curbs and a resurgence in inbound tourism, and analysts expect private consumption to support overall growth amid weakness in global demand.
Read more