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Category - Japan

China's Steadying Inflation Leaves Door Open for Monetary Easing

This article from Bloomberg News may be of interest to subscribers. Here is a section:

“The PBOC is likely to continue to use interest rate and liquidity tools to loosen monetary conditions in 2020, though the easing will probably be less pronounced than last year,” David Qu, a China economist at Bloomberg Economics in Hong Kong, wrote in a note. “We expect the PBOC to stick to a stance of measured easing to counter the economic slowdown.”

For the year, consumer inflation for 2019 stood at 2.9%, in line with the government-set target of 3%, while producer prices declined 0.3%. Core inflation, which removes the more volatile food and energy prices, stabilized at 1.4% in December, signaling ongoing weakness in the broader economy.

China’s economy has shown signs of recovery in recent months as global demand steadies and trade tensions ease. As commodity prices rise and factories start restocking, PPI deflation is set to continue to moderate and some see it turning positive as soon as January.




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U.S. Strike Ordered by Trump Kills Key Iranian Military Leader in Baghdad

This article from the Wall Street Journal may be of interest to subscribers. Here is a section:

Iraqi Prime Minister Adel Abdul-Mahdi condemned the targeted killing as a violation of the terms underpinning the U.S. troop presence in the country.

Mr. Abdul-Mahdi said he had submitted a formal request for parliament to convene in order to adopt necessary measures “to protect Iraq’s dignity and sovereignty.” He didn’t say what those measures would be.

The killing of the two men is likely to mark the beginning of a dangerous new chapter in the rivalry between the U.S. and Iran, which escalated after supporters of an Iran-backed Shiite militia attempted to storm the U.S. Embassy in Baghdad earlier this week. Mr. Mohandes was deputy leader of the Popular Mobilization Forces, an umbrella group that led the embassy attack.



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Japan's Topix Advances, Set for Best Quarterly Gain Since 2016

This article by Min Jeong Lee and Shingo Kawamoto for Bloomberg may be of interest to subscribers. Here is a section:

Japan’s Topix index advanced, set for its best quarterly gain since 2016, after the latest economic data out of the U.S. indicated the labor market is solid.

Banks contributed most to the benchmark measure’s Friday gains. The Nikkei 225 Stock Average slipped 0.4% to 23,837.72, as 30 of its components traded without rights to receive the next dividend, including Canon Inc. and Japan Tobacco Inc. Next Monday will be the last trading day of the year.

The Topix extended its gain for the quarter to 9.2%, the biggest such increase in three years. Japanese equities have rallied since September, bolstered by signs of easing tensions between the U.S. and China.

U.S. jobless claims fell to a three-week low of 222,000 in the week ended Dec. 21, in another sign of health in the U.S. economy. Major U.S. equity indexes climbed to fresh records Thursday in holiday-thinned trading.



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Japan Leans on Fiscal Stimulus to Keep Recession at Bay

This article by Toru Fujioka, Yoshiaki Nohara and Takashi Hirokawa for Bloomberg may be of interest to subscribers. Here is a section:

“In any country, the positive impact of extra monetary stimulus is limited, which is especially true in Japan and Europe where rates have turned negative. You have no effective choice but to execute fiscal measures to support growth,” said Harumi Taguchi, Tokyo-based principal economist at IHS Markit.

Earlier in the day, Abe described the stimulus as a three-pillared package designed to aid disaster relief, protect against downside economic risks and prepare the country for longer-term growth after the 2020 Tokyo Olympics.

He said the stimulus would be funded by a supplementary budget for the current fiscal year ending in March, and special measures in the following year. The package outlines 4.3 trillion yen in funding for the measures in an extra budget this fiscal year.



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Abe, Moon Break Ice After Worst Japan-South Korea Fight in Years

This article from Bloomberg may be of interest. Here is a section:

Moon and Abe shared the view that the relationship between South Korea and Japan is important and re-affirmed in principle that issues between the two nations should be resolved via dialogue, the presidential office said in a text message. Abe conveyed Japan’s “basic stance” on bilateral issues in his exchange with Moon, the Tokyo-based Kyodo News agency said separately, citing the Japanese foreign ministry.

The brief, 11-minute meeting at the Association of Southeast Asian Nations summit in Bangkok came as a long-simmering feud escalated into a trade-and-security dispute, leading to boycotts of Japanese imports and the decision to scrap an intelligence-sharing pact. The encounter followed a break-through meeting last month between Abe and South Korean Prime Minister Lee Nak-yon.

Moon proposed high-level talks, if needed while Abe said every effort should be made to resolve the feud, Moon’s office said. Abe last met Moon in September 2018 and passed up a chance to meet him for formal talks during Group of 20 events in Osaka in June.

The remarks were the most positive yet since South Korean courts issued a series of rulings last year backing the claims of Koreans forced to work for Japanese companies during the country’s 1910-45 occupation of the Korean Peninsula.



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Email of the day on Japanese growth stocks

Several weeks ago, I had the same feeling as you on Japan. For investment purposes I decided to concentrate on Japanese 5G related companies. Ignoring the major telecom co's, I then came up with the following list of companies involved in parts related to the 5G area:



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Japanese Stocks Post First Weekly Gain in Three on Trade Hopes

This article by Shoko Oda and Toshiro Hasegawa for Bloomberg may be of interest to subscribers. Here is a section:

Seeing how the two countries split off back in July, markets may not have had high expectations for this round of talks,” said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui DS Asset Management. “But a partial agreement now seems probable, with topics like subsidies being shelved for next year.”

Investors are breathing a sigh of relief as they anticipate a partial deal to come after 18 months of negotiations. An earlier report said the White House was looking to implement a currency pact as part of a preliminary deal that could see the scheduled tariff increase next week suspended. China has also said the country was open to a partial deal with the U.S., with plans to offer non-core concessions like purchases of commodities.

“There was a risk that negotiations would be cut short,” said Nobuhiko Kuramochi, the head of investment information at Mizuho Securities Co. in Tokyo. “But with both sides continuing the talks, there’s an expectation that some sort of a mini-deal will come out in the end.”



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Japan's Topix Set to Beat S&P 500 for First Time in Two Years

This article by Keiko Ujikane for Bloomberg may be of interest to subscribers. Here is a section:

“Japanese stocks underperformed for a long time and their valuations were left as very cheap,” Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management Ltd. in Tokyo. “A correction in cheaper valuation stocks have occurred globally and Japanese stocks are the most prominent example for that.”

September has been good to the Topix, which is set for its best month since October 2015. Up until late August, the gauge was one of this year’s worst-performers among the 24 developed markets tracked by Bloomberg.

Norihiro Fujito, the chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, says Japan’s market is enjoying a “a typical return reversal.” Foreign investors may be taking profit on U.S. equities, while covering short positions on Japanese shares, he said.

Foreigners net bought 937 billion yen ($8.7 billion) of cash equities and futures in the week ended Sept. 13, according to Japan Exchange Group data. That was the fourth consecutive week of net buying.



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Bank of Japan Hints at Possible Action in October

This article by Megumi Fujikawa for the Wall Street Journal may be of interest to subscribers. Here is a section: 

“If I am asked if I feel more favorably about additional easing compared with the previous meeting [in July], my answer is yes,” Mr. Kuroda said at a news conference. “There is no sign of recovery in overseas economies.”

He added, “Even if we consider additional easing, I don’t think it’s necessary to change the current framework” of monetary policy, which includes setting a target yield for 10-year government bonds—currently zero—and buying riskier assets such as stocks.

Inflation has been running below 1% recently, short of the BOJ’s 2% target. The BOJ said in its policy statement that it needs to pay closer attention to “the possibility that momentum toward achieving the price stability target will be lost.”

“It is sort of a notice that the bank is going to take additional easing action,” said Hiroshi Ugai, an economist at JPMorgan in Tokyo and a former BOJ official.

Mr. Ugai said the BOJ would likely move next month, but might hold off if markets are calm or if it is having trouble assessing the impact of an Oct. 1 increase in the national sales tax to 10% from 8%.



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Factors or Fundamentals, Quant Tremor Is Field Day for the Geeks

This article by Sarah Ponczek and Vildana Hajric for Bloomberg may be of interest to subscribers. Here is a section:

You wouldn’t know it from benchmarks, but beneath a tranquil surface violent swings are lashing traders along obscure fault lines. Companies like real-estate firms that rose the most in 2019 are plunging, and some that have trailed are being pushed out front. It’s been a mild reckoning for hedge funds and others who have bet on the status quo persisting.

Amid all the churn has been a renewed focus on a quantitative concept known as factor investing, which groups companies not by industry but traits such as how fast their prices move or profits rise. A question gaining currency in the past few days is whether these categories are just handy descriptions of twists in the market -- or are at some level guiding them.

“It seems very mechanical right now,” said John Swarr, investment specialist at Penn Mutual Asset Management, which has $27 billion under management. “If you look within some of these stocks that are being hit the hardest, some are in much better shape than others and yet they’re all being affected similarly,” he said. “It does feel like it’s a rules-based rotation.”



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