In the past two decades, public sector debt has risen to 227% of GDP, currently the largest such load in the world (Chart 5). The government has a self-imposed target of balancing the budget by the end of this decade. As the first step towards fiscal consolidation, the former administration under Prime Minister Noda has legislated to hike consumption taxes in April 2014 and October 2015 (from 5% to 8% and then to 10%). Despite Abe's ambiguous stance over the consumption tax plan, he has pledged to maintain the target of balancing budget deficit by 2020. This means even if the consumption tax hike is postponed / suspended, some other forms of tax increases or spending cuts would replace them. The public sector's deleveraging will kick start in 2014 at the earliest and the economic impact will be negative – unless the private sector can releverage to offset.

Importantly, the market forces prompting public deleveraging may also surface in mid-2010s. Japan's public sector that heavily depends on domestic financing will need to borrow externally to a larger extent in the coming years. The country's gross saving ratio has fallen to a record low of 20% in 2010, from 25% in 2000s and 30% in 1980s-1990s (Chart 6). Based on the worsening demographic profile, the saving ratio is likely to drop further to 15% in mid-2010s. Given the investment ratio of a steady 20% in recent years, the saving-investment gap may turn negative and the current account would fall into a structural deficit.

As the public (and also the private) sector's dependence on foreign financing increases, domestic market yields will be more susceptible to global liquidity conditions and foreign investors' risk-rating on JGBs (and other JPY assets). Due to a larger participation of foreign investors in the JGB market, the BOJ would also need to be prudent on monetary easing, due to concerns about creating the perception of debt monetization, weakening foreign investors' confidence, and triggering excessive capital outflows and disorderly currency depreciation. In short, higher dependence on external financing implies the risk of higher yields. This will increase government financing pressures and accelerate the process of public deleveraging. The prospects of private sector releveraging would also be weakened due to rising interest rates.

Eoin Treacy's view The new Japanese administration has made a convincing start to its anti-deflation agenda. However, the trend of reform will need to persist if global investors are to continue to look favourably on the country's prospects. Quantitative easing alone has not been enough to reignite growth in either the USA or UK. Therefore it is reasonable to expect that additional measures will be required if Japan is to achieve the growth necessary to justify its adoption of extreme monetary measures.

Despite official claims to the contrary, devaluing the Yen is central to how Japan plans to achieve its ambitions. For global investors this necessitates a currency hedge in order to participate in Japanese equities. For Japanese investors, the loss of purchasing power is perhaps a more pressing concern. The domestic stock market should keep pace with inflation but the allure of global assets with higher yields in stronger currencies has also been burnished. These types of assets are equally attractive to all investors.

I thought it might be instructive to highlight Asian listed companies with yields in excess of 5% and market caps of more than $1 billion. Here is the resulting list of 206 shares. Australia's financial sector is a clear standout.

The S&P/ASX Finance Index has held a progression of higher major reaction lows since August 2011. It rallied for 16 consecutive weeks from the October lows before pausing mostly below 5500 from early March. This reaction was relatively similar sized to that posted in October and the Index posted a new recovery high today. A sustained move below 5280 would be required to begin to question medium-term scope for continued upside.

ANZ has a gross yield of 7.12% (Net 4.98%) which is 1.53 times covered. The share broke successfully out of a more than 3-year range in January and has been consolidating below A$30 since. A sustained move below the 200-day MA would be required to question medium-term scope for additional upside.

National Australia Bank (yield 8.08%, net 5.58%, cover 0.94), Commonwealth Bank of Australia (yield 7.57%, net 5.21%, cover 1.33) and WestPac Banking Corp (yield 7.53%, net 5.22%, cover 1.17) share similar patterns to ANZ.

Among some of the smaller banks Bendigo Banking Corp (yield 8.37%, net 5.77%, cover 0.81) is testing the upper side of its four-year base and a sustained move below A$10 would be required to question potential for a successful upward break.

Bank of Queensland (yield 7.91%, net 5.42%) has been ranging below A$10 since early March and a sustained move below A$9.23 would be required to check current scope for a successful upward break.

SunCorp (yield 7.25%, net 3.68% cover 1.03) has held a progression of higher reaction lows since June and broke out of its most recent consolidation today. A sustained move below A$11.15 would be required to question current scope for continued upside.

In the retail sector both David Jones (yield 8.4%, net 5.86%, cover 1.1) broke out of a yearlong base in March and found support this week in the region of the 200-day MA and the upper side of the underlying range. A sustained move below $2.65 would be required to check recovery potential.

Woolworths (yield 5.3%, net 3.62%, cover 1.41) broke out of a five-year base in January and rallied to post a new all time high. The share found support in the region of A$33.30 in late March and a sustained move below that level would be required to question medium-term scope for additional upside.