Japan Economy Forum

[Aepsilons]

LONDON (ShareCast) - The Japanese yen climbed on Wednesday morning with the USD/JPY entering a bearish continuation after a pull-back to the 200-hour moving average.

USD/JPY hourly chart


Similarly, the EUR/JPY fast-approached a horizontal support level marked by a four-month low at 137.96. The intraday low is 138.04 as buyers stepped in to halt the decline, at least momentarily.

EUR/JPY Daily Chart


Quite possibly, not enough focus is being placed on Japan's progress towards its inflation target and structural reforms.

It should be noted that 'Abenomics' together with the Bank of Japan's (BOJ) ultimate bazooka of quantitative easing measures in April of 2013 was responsible for driving the USD/JPY from below 80 to comfortably above 100 in just over a year and a half.

Expectations were for a second round of QE but it may not be necessary for some time, if at all.

While the 'third arrow' of Abenomics may have been a bit disappointing so far, there could be some important structural shifts in the works. It should be noted that fiscal reform policies always tend to be slow.

For one, the government is planning to work out measures for accepting more foreign workers in Japan as part of a new growth strategy. The new rules would ease limits on the kinds of jobs permited for foreigners. Such a plan acknowledges the country's need to replace an aging population in the workforce.

Additionally, there will be new "strategic special zones" that promote deregulations and tax breaks. Japan is laying the groundwork for a corporate tax cut.

One sign of a possible economic rebalancing is that Japan gained status as a tourist attraction, generating the first tourism surplus in 44 years. Foreign tourists spent more money in Japan than the Japanese spent on their trips abroad. Two reasons are a cheaper yen - which lowers travel costs- and a larger middle class in Asian countries that is travelling more.

There is also some market chatter that concerns changes to both sides of Japan's public pension system, particularly how it will be funded and how the fund will allocate its investments. Potential increases to the retirement age and greater worker contributions would help make the system sustainable. On the investment side, the pension fund could be allowed to allocate more funds into equities and foreign investments, which is expected to weaken the currency as much as 10% and would possibly reduce pressure on the central bank.

If Japan finally achieves its inflation target and gets on track to putting its fiscal house in order by rebalancing its domestic economy, it may no longer need to depend on the central bank's weakening of its currency.

With a forex market that has been centering around monetary policy, traders should take note of fiscal policies and possibly a changing macroeconomic landscape. Analysts have long demanded structural reforms and Japan could be the country that is, at least to a certain extent, beginning that process.



Reference: YAHOO FINANCE

 

[Aepsilons]

Asia Pacific has overtaken Europe to become the world’s biggest real estate investment market for the first time, thanks to largely to the booming Chinese property industry.

This rapid growth is triggering a wave of new high-rise construction, with the number of super-tall 300m plus buildings tripling in less than a decade.


Half of the world’s tallest buildings were constructed in the past four years, and 90 per cent of these are in China, southeast Asia or the Middle East, according to a research report by insurer Allianz. Nearly a third of the world’s tallest buildings are now in China.

The rapidly growing Asia Pacific market – up 9 per cent year on year – pushed the global value of commercial real estate stock held by investors to a record of $12.9tn in 2013, figures from property advisory company DTZ show.

The Asia-Pacific market is now worth $4.6tn, overtaking Europe which grew just 2 per cent to reach $4.4tn, DTZ found. The Chinese market – which has grown by a compound annual rate of 32 per cent in the past decade – has overtaken Japan to become the largest in Asia-Pacific.

This had taken it from the world’s 10th largest market to the second, behind only the US, DTZ said.

The renewed activity is fuelling a surge of tower building: half of the world’s 100 tallest buildings are now in Asia Pacific, three times the number in North America, according to Allianz.

The construction shift eastward is being driven by investor demand for flagship real estate assets, growing populations and low labour costs, Allianz report author Ahmet Batmaz, Allianz global head of engineering risk consultancy, said. “These buildings are prestige objects to show the power and wealth of these areas and regions.”

Fears have grown in recent months about the levels of debt in the Chinese real estate market, particularly as property prices have begun to wobble. But the average gearing of Chinese investors was “well below those of Europe or the US” at 54 per cent, Hans Vrensen, DTZ global head of research, said.

“There is a very large pipeline of new developments which will trigger a rise in vacancy rates,” he warned. “But the problems in China will not be as severe as in Europe, because the leverage ratios are not the same.”

De-gearing could open the Chinese market up to international distressed-debt investors, he added, offering “a massive opportunity”.

“Everyone wants to have a share of the Chinese market and maybe that opportunity is coming up now as developers need to fund their upcoming activity by selling off some of their assets,” he said.

Global investment activity hit a post-crisis high of $528bn, driven by an upswing in cross-border investment which made up nearly a quarter of all transaction volumes, DTZ found – the highest level since the financial crisis and a sign of world real estate markets returning to their pre-crisis norms.



Reference: FT

 

[LeveragedBuyout]

TOKYO—Japan's $1.26 trillion public pension fund will likely announce a boost to stock and foreign-bond investments in early autumn, the head of its investment committee said Tuesday, potentially sending tens of billions of dollars into new markets.

A shuffle at the world's largest pension fund would achieve one of Prime Minister Shinzo Abe's objectives and could help invigorate Japan's economy, which is beginning to emerge from a decadeslong era in which investors mostly avoided risk.

"I personally think that we need to complete [the new portfolio] in September or October," Yasuhiro Yonezawa, head of the Government Pension Investment Fund's investment committee, said in an interview. "There's no reason to be slow."

Mr. Yonezawa outlined a tentative plan for a portfolio shift that would raise the allotments of the fund's assets to go into domestic stocks, foreign bonds and foreign stocks by five percentage points in each category. The aim is twofold: to boost returns to ensure Japanese retirees get the payouts they expect, and to stimulate risk-taking at home by funneling money into growing Japanese businesses.

That is in tune with the prime minister's pro-growth "Abenomics" policies.

Since taking office in late 2012, Mr. Abe has exhorted the pension fund to rethink its long-standing conservative investment strategy.

Currently, domestic stocks and foreign stocks are each targeted to get about 12% of the fund's investment. Under the baseline scenario outlined by Mr. Yonezawa, those figures would rise to 17% each, while the portion allotted to foreign bonds would rise to 16% from 11%. Domestic bonds would fall to 40% from 60%, and the portfolio would likely include a new category for alternative investments in areas such as infrastructure, he said.

Mr. Yonezawa said he and two other members of the eight-member investment committee would begin to craft a new portfolio this week.

The figures could change based on the group's discussions, he said, adding that the three members would discuss whether to carry out the reshuffle before or after the announcement set for this autumn.

The changes could raise uncertainty for tens of millions of Japanese who count on steady pension payouts in retirement. With its traditional focus on Japanese sovereign debt, the fund has performed relatively well in recent years despite extremely low debt yields, in part because the country's deflationary environment was good for bonds.

"The [Government Pension Investment Fund] shouldn't be used as a tool for short-term-oriented intervention in asset markets. It's not a piggy bank for short-term policy purposes. Each penny of the GPIF is pension money," said Nobusuke Tamaki, a former fund official who now teaches at Otsuma Women's University.

The new focus is essentially a bet on inflation, which Mr. Abe and Japan's central bank have pledged to create.

"Until now, it wasn't too good to invest in Japanese stocks, when there wasn't Abenomics," Mr. Yonezawa said. "But recently, Japanese companies are changing, and I think things are getting better." He said Japanese firms were getting a higher return on equity and shifting toward stronger corporate governance.

The Japanese pension fund is like Social Security in the U.S. in that it collects money from payroll taxes and uses the cash for payments to retirees. But, unlike Social Security, which puts its funds in nontradable Treasury securities, the Japanese fund can invest in a range of assets, including stocks and bonds from both Japanese and foreign issuers.

The fund has invested conservatively, giving a 60% weighting to domestic bonds.

It has operated on a shoestring budget out of a single office in Tokyo with fewer than 80 employees.

By comparison, the second-largest pension fund in the world—Norway's $770 billion Government Pension Fund Global—is run by an organization with about 370 employees.
Reports of changes to the Japanese fund lifted the Tokyo stock market last week, with investors aware that even a shift of a percentage point could send $10 billion flowing in a new direction. But the Nikkei Stock Average remains down for the year as foreign investors question whether Mr. Abe's program will be enough to jolt Japan's economy out of its doldrums.

While the Japanese pension fund's changing priorities could push up the value of some foreign assets, the money would likely be so diversified that its impact would be diluted.

Even before the new portfolio is completed, the fund has made significant changes in recent months. In February, it said it would start its first joint infrastructure-investment program, through which it would work with other investors to fund projects such as power plants, gas pipelines and railways in developed countries. The fund has started a new four-person division dedicated to nonlisted assets such as infrastructure, private equity and real estate, people with knowledge of the organization say.

The fund has traditionally hired large asset managers such as BlackRock Inc., BLK -1.05% but in April it unveiled a new roster of managers for its portfolio of Japanese stocks and brought on some little-known names.

One of the new managers, Seattle-based Taiyo Pacific Partners, has sponsored annual retreats for 25 to 35 Japanese chief executives for the past five years with the hope that improving management will translate into better shareholder returns. In one group activity at the retreat, Japanese managers work together under hot conditions to pound unfinished metal into samurai swords.

Fund managers are interested in seeing whether the pension fund will continue to diversify its roster of asset managers, although some say the fund's paltry management fees don't make the business worthwhile. The pension paid a little more than $200 million, or about 0.02% of its portfolio, for outside managers in the fiscal year that ended in March 2013.




Reference: WALL STREET JOURNAL

I really appreciate your posts on Japan's economy and financial markets. Please keep up the good work.

 

[AUSTERLITZ]

True constant stream of news on japan,a very geopolitically important country is much appreciated.

 

[Aepsilons]

The leaders of Japan and the European Union say they want to speed up talks on a wide-ranging free trade agreement.
EU Commission President Jose Manuel Barroso said Wednesday in Brussels it's an "important ambition to speed up these negotiations" to reap the benefits of an agreement which would "foster growth and job creation."

Visiting Japanese Prime Minister Shinzo Abe said through a translator: "We confirm the importance of an early conclusion."

Japan and the 28-nation bloc are top exporters and together produce more than one-third of the world's economic output.

The free trade talks were launched last year, but many stumbling blocks remain. A conclusion of a deal isn't expected before next year at the earliest.


REFERENCE: YAHOO NEWS

 

[Aepsilons]

Thank You @MOD , @WebMaster , @Aeronaut , @Hu Songshan for merging the threads together !

Arigadou Gozaimasu!

 

[Aepsilons]

MANILA, Philippines–Japanese companies are looking to make the Philippines their manufacturing hub in the Asean given the continued robust performance of the Philippine economy, the Department of Trade and Industry said Friday.

Trade Assistant Secretary Ceferino S. Rodolfo told reporters that the Industrial Cooperation Dialogue between the Philippines and Japan, which is being held Monday, is meant to “advance the existing cooperation” and further boost trade and investment ties between the two countries.

The meeting will look into how the Philippines can be a further viable destination for industrial foreign investments by Japanese firms, for human development, and for enhancing competitiveness of the small- and medium-sized enterprises (SMEs).

High-level trade officials are also expected to discuss how the two countries could “synchronize” their respective policies to realize that vision of establishing a manufacturing hub in the country.

According to Rodolfo, the Japanese delegation is being led by Toshiyuki Sakamoto, deputy director general for trade policy at the Japanese Ministry of Economy, Trade and Industry (Meti). Also part of the delegation, which would comprise mostly the small and medium enterprises in Japan, is Kazumi Nishikawa, special adviser to the minister at Meti and executive director at the Japan External Trade Organization (Jetro) Singapore.

“Representatives from Toyota Japan are also expected to be at the dialogue to share their experiences as to what is really happening in the global automotive industry and how the Philippines can position itself as a development hub in Asean. There is a huge interest in the country right now,” Rodolfo added.

The dialogue will be attended by representatives from state-run agencies such as the Philippine Institute for Development Studies, National Economic and Development Authority, Department of Finance, Development Academy of the Philippines, Department of Labor and Employment, Department of Science and Technology, Technical Education and Skills Development Authority, and both houses of Congress.

Also attending the meeting are officials of the Philippine Automotive Federation Inc., Toyota Motor Philippines Co., Mitsubishi Motors Philippines, as well as IDE-Jetro, Research Institute of Economy, Trade and Industry, and the National Graduate Institute for Policy Studies from Japan.


Read more: Japan firms eye PH as regional manufacturing hub | Inquirer Business
Follow us: @inquirerdotnet on Twitter | inquirerdotnet on Facebook

 

[Indus Falcon]

Ideally the best place to manufacture is China, but due to the political climate they are looking at Philippines which is not a very smart move. They would have been better of with Malaysia or Indonesia.

 

[Aepsilons]

Ideally the best place to manufacture is China, but due to the political climate they are looking at Philippines which is not a very smart move. They would have been better of with Malaysia or Indonesia.

No, I have been to the Philippines before for a business trip, and we have already bustling economic relationship with the Philippines. In addition, the Philippines' have very large manufacturing centers such as Cebu, Cagayan De Oro, Iloilo City, Davao, General Santos City, Bacolod City, Dipolog City, which have a growing industrial/ manufacturing capability. And home to plethora of Japanese businesses already.

One of our newest areas of interest is the city of Cebu City, and Mandaue City, which is in the central Philippines. Not only is it a port city, but also home to a very educated work force. The province is home to some 5 million poeple, and they are very very open and amicable towards Japan and Japanese collaboration.

We do have investments in Malaysia and Indonesia, as well.

 

[atatwolf]

Ideally the best place to manufacture is China, but due to the political climate they are looking at Philippines which is not a very smart move. They would have been better of with Malaysia or Indonesia.

China is declining power.

These will be the new guys in the block.

 

[Indus Falcon]

China is declining power.

These will be the new guys in the block.

You are entitled to your opinion and I do partly agree with you. But there is a difference between China and these countries:

1) The investment China is making in R&D
2) The knowledge base that exists in China.
3) The military, and political clout China has

I could go on, but this thread is about Japan, lets not derail it.

 

[atatwolf]

You are entitled to your opinion and I do partly agree with you. But there is a difference between China and these countries:

1) The investment China is making in R&D

China is incompetent in the R&D field compared to Japan. Japan is doing investments in these countries that will replace China. China can't do sh1t. Soon China will be surrounded by south-Koreas.

2) The knowledge base that exists in China.

Copy and paste base

3) The military, and political clout China has

I could go on, but this thread is about Japan, lets not derail it.

China's military is paper tiger compared to their neighbor's army. One for all and all against communist terrorism.

 

[Indus Falcon]

China is incompetent in the R&D field compared to Japan. Japan is doing investments in these countries that will replace China. China can't do sh1t. Soon China will be surrounded by south-Koreas.


Copy and paste base


China's military is paper tiger compared to their neighbor's army. One for all and all against communist terrorism.

Forget what China can do and cannot do. Why can't you have a civil conversation, on any thread without dragging in profanities? Seriously, what is wrong with you?

 

[senheiser]

China is declining power.

These will be the new guys in the block.

funny how china has then more growth than all of these countries despite having bigger gdp per capita

 

[Kyle Sun]

China is incompetent in the R&D field compared to Japan. Japan is doing investments in these countries that will replace China. China can't do sh1t. Soon China will be surrounded by south-Koreas.
Copy and paste base
China's military is paper tiger compared to their neighbor's army. One for all and all against communist terrorism.

Okay , our R&D is suck . How about yours ?

As far as i know, your country is only famous of kebab , can you show us some other awesome products of Turkey?