Financial Communique » Japan

The Japanese Prime Minister Naoto Kan resigned

Viliyana Filipova — Fri, 26 Aug 2011 18:25:06 +0000

The Japanese Prime Minister Naoto Kan resigned after little more than a year at the head of government. Khan retired from the management office of the Democratic Party. The rating of 64-year-old Naoto Kan collapsed less than 20 per cent due to dissatisfaction with the Japanese on how to deal with the crisis of nuclear accident at the Fukushima-1 nuclear power plant following a powerful earthquake and tsunami of March 11th. He promised to resign after parliament adopted two laws – the issue of government bonds to cover the budget deficit and to promote energy production from renewable sources. Lawmakers approved the legislation this morning, stated Monday. It is expected that the ruling Democratic Party on Monday to elect its new leader, according to Japanese political tradition would be the new prime minister. The vote in the House will be Tuesday. It is believed that the best chances to take the party and prime minister is former Foreign Minister Seiji Maehara of the conservative wing of the DPJ, known for its hard line toward China and North Korea, told AFP. If elected, 49-year-old Maehara will become the youngest prime minister of Japan after World War II.
Until now, the local press pointed the favorite Finance Minister Yoshihiko Noda. Other contenders for the premiership are the Minister of Economy, Trade and Industry Banri Kayeda, Minister of Agriculture, Forestry and Fisheries Michihiko Kano and former Minister of Transport Amount Mabuchi.

Higher taxes in Japan

Viliyana Filipova — Sun, 26 Jun 2011 20:11:24 +0000

The raising of the taxes in Japan should increase the funds for reconstruction of areas devastated by the earthquake and tsunami of 11 March, the government offered expert committee. It is not clear whether recommendations are binding on the political tension surrounding the Prime Minister Naoto Kan. The Commission proposal provides a basis for establishing the costs of restoring the northeastern parts of Japan, which was devastation by an earthquake of magnitude 9.0 and deadly tsunamis, which are expected to be over 10 trillion yen (124 billion dollars). The government plans to Cannes next month to present to parliament a small additional budget to overtime budget of 4 trillion. yen, approved in May, to combat the effects of natural disasters. Yesterday the government adjusted its assessment of material damage from the disaster to 16.9 trillion. yen, which is below the original estimates of 16-25 trillion yen.
It is not yet clear whether the proposals will soon adopt a particular form of the background of the uncertain future of the government, Reuters notes.

Japanese recession returned

Viliyana Filipova — Thu, 19 May 2011 12:35:25 +0000

The Gross Domestic Product (GDP) of Japan shrank by 0.9 percent in the first quarter – twice as powerful than expert expectations. Calculated on an annual basis, it makes a drop of 3.7 percent, the government said in Tokyo. Analysts predicted a decrease of 2%. Since GDP also reported a decline in the previous quarter, according to country definitions is back in recession. The Asian country out of the previous major depression following World War II until the second quarter of 2009 earthquake and subsequent tsunamis and the nuclear accident in Fukushima nuclear power plant is expected to throw the country into even more serious crisis. Experts fear that the economy will stagnate and in the current quarter, because the consequences of the earthquake still loaded production and exports. The Japanese Economy Minister Kaoru Yosano said, however, a temporary phenomenon. The decline in GDP was mainly due to the effects of the earthquake. Japanese economy really will remain weak for some time. But she had the strength to stand fast back legs. Supply chain industry gradually stabilized and recovery is expected to stimulate the economy. Yosano confirmed the forecast of government, which expects to start in April fiscal year grew by just under one percent.
Furthermore, the exports and consumption decline reported, which makes about 60% of the country’s economy. It shrank by 0.6 percent, slightly more than analysts expected 0.5%. Investment shrank by 0.9 percent – well below the concerns of professionals. Although the crisis is expected Bank of Japan to continue to adhere to “policy of cheap money.” Lately, she still gave signals that may weaken further monetary policy if the earthquake has affected more severely than expected economic

Fed owns higher state debt than China

Viliyana Filipova — Wed, 02 Feb 2011 19:45:46 +0000

The Federal Reserve (Fed) surpassed China and is now the largest owner of U.S. federal debt, although it has not gotten half the bonds worth 600 billion dollars from the program announced in November for the infusion of liquidity. On Thursday last week the Fed has held U.S. bonds to 1.108 trillion dollars. According to the latest data on foreign creditors of the U.S., the government bonds, which China holds are about 896 billion dollars, and for Japan – to 877 billion dollars.
“By June the Fed has accumulated to U.S. bonds worth 1.6 trillion. dollars – roughly the total U.S. debt held by China and Japan combined, “said Richard Gilhuli, strategist at TD Securities. Fed surpassed China as the largest creditor of the U.S. government a few months ago, “he notes. Fed buys U.S. debt in two programs. The largest is the program for injection of liquidity known as the QE2, which was launched in November and the buying of U.S. bonds to 600 billion dollars by June. Fed buys U.S. bonds and also for $ 30 billion each month, reinvest the payments of mortgages it holds. By June the Federal Reserve plans to acquire federal debt of $ 800 billion in both programs. Since November he bought bonds of 284 billion dollars. Fed provides 67% of bonds purchased QE2, have a maturity of between 4.5 and 10 years. Only 5% of acquired so far are bonds with a maturity longer than 17 years. Last Friday, the yield on 30-year U.S. Treasuries briefly climbed to their highest levels since April.
“The end of the QE2 will be a big test because yields on U.S. debt will probably increase after the Fed stops to buy bonds,” said David Allen, strategist at CRT Capital. “We still do not know whether this increase will be 20, 30 or even 50 basis points,” he said. Total world’s central banks hold U.S. bonds to 2.604 trillion. dollars. After intensified the pace of buying in June, when they have bonds to 2.250 trillion. dollars in November, when the Fed started Q2, central banks retain their positions in U.S. bonds at around 2.6 trillion. dollars. This indicates that after the intervention of the Fed’s other central banks have reduced the pace of buying the U.S. debt. Before the financial crisis, the Fed held the bonds to 775 billion dollars. This amount was reduced to 300 billion dollars in the first half of 2008, when the Fed sold bonds in an attempt to stabilize the financial system. The first program for injection of liquidity, launched in 2009 was about $ 300 billion.

Australia opened the second Stock Exchange

Viliyana Filipova — Wed, 24 Mar 2010 21:45:10 +0000

Australia ended the monopoly of the stock exchange, permitting the creation of a second exchange for trading in shares in the country. Authorization is granted to Japan’s Nomura, but its purpose is to create competition to help develop the market. Among the main priorities of Australia has become the local stock market in the center of financial services in Asia-Pacific region, said Finance Minister Chris Bowen of the country, quoted by AP. According to him, higher competition should lead to cost reductions of about 6 million Australian citizens who have contributions to pension funds. “If Australia really wants to be considered a financial center if we are to global center for financial services, the monopoly days of our financial market must be completed,” said Bowen. Authorization for establishing a second exchange in the country is a company of Chi-X Global, which is part of network of Nomura Holdings.
The company operates the exchanges in Europe and Canada.

U.S. government securities with worst year

Viliyana Filipova — Sat, 02 Jan 2010 02:12:11 +0000

The U.S. government securities (GS) recorded its worst year since 1978, after the government expedite the issuance of new debt to help restore the economy from the deepest recession in six decades. According to the index of Bank of America Merrill Lynch government securities have lost 3.6 percent this year – the worst performance for at least 1978, when he began calculating the index. Holders of U.S. debt, however, have achieved returns of 81% in the last decade, according to this index, while the index for the same period Standard & Poor’s 500, including dividends and has lost 8 percent of its value. President Obama takes unprecedented amounts of funding for different programs. Only last week the Treasury sells government bonds worth 118 billion dollars. The issued government debt outstanding reached a record 7.17 trillion. dollars in November after the end of last year was a level of 5.80 trillion. “This is the largest increase in budget deficit for one year, excluding periods of wars and depressions. Realistic expectations for economic recovery and the accompanying increase in interest rates increased the yield of government securities, which automatically means lower prices, “says Christian Kari, a senior analyst at Societe Generale SA, Tokyo. According to him, prices could fall even more.
Since the beginning of the year the yield on the basic 10-year government bonds rose by 1.59 points to 3.80 percent in early London trading today. “The volume of supply will remain a problem next year,” said David Shnautts strategist at Commerzbank AG, Frankfurt. “Despite the large supply and the prospects for economic recovery, however, expect the yield on government securities to be structurally lower, as banks are likely to increase their investments in safe and liquid assets such as government securities,” he finishes. Yield spread between short-and long-term government securities barometer for the economy, extending a record earlier this month after investors agreed that the emerging recovery would cause inflation and reduce the demand for government debt, pushing the yield on long-term bonds. The difference in yield between 2-year and 10-year bonds reached a record 2.88 percentage points on December 22 by only 1.45 percentage points at the beginning of the year. Spread is currently at a level of 2.71 points. Spread between 10-year government bonds and government bond inflation-protected with the same maturity rose to 2.43 percentage points yesterday – the highest level since July 2008 onwards. This spread is a measure of inflation expectations and shows that the recovering economy can change attitudes and lead to even higher yield (respectively, lower prices) of government bonds.

Painful weekly decline for the Japanese and Chinese markets

Viliyana Filipova — Mon, 30 Nov 2009 10:13:22 +0000

Today’s session brought indexes in Asia and the Pacific region, the strongest decrease their day for the past eight months, but ended the week with a painful decline in most markets in the region. Stood at the head Japanese, Chinese and South Korean securities market, which lost between 4% and 6% of its market capitalization over the past five trading sessions. Reason for mass sales became the news of the failure of the Dubai government investment holding company Dubai World to meet its obligations to creditors. The Fund has a debt for 59 billion dollars, equivalent to most of Dubai’s foreign debt to 80 billion dollars. Meanwhile, the Japanese yen rose to its highest rate against the dollar since 1995. Financial difficulties of the Dubai World stocks fell on banks and insurers in the region, led by HSBC Holdings, whose shares fell nearly 8 percent. This is due to investor concerns about exposure of large international banks to fund Dubai. Construction companies also suffered because of the activity of the Dubai World in the construction sector. The regional index MSCI Asia Pacific, which brings together companies from stock markets in ten Asian countries plus Australia and New Zealand, slid 3.2 percent to 113.78 points. This is the strongest decrease in the stock measure within one day of 30 March so far. Financial companies in its composition have contributed most to the sharp drop in MSCI Asia Pacific. The good news that unemployment in Japan fell for the third consecutive month in October, while consumer spending increased household failed to stop reductions in the indexes. Thus MSCI Asia Pacific to cut their lead to five-year bottom of 9 March to 61 percent. For the past five trading sessions the index fell by 2,7 percent.
The Japanese Nikkei 225 fell 3.2 percent to 9081.5 points. Appreciation of the yen, Japanese exporters worried as Sony, Canon and Toyota, which warned that this rate against the dollar will fail to meet set financial goals. After news of the Japanese government signaled that it may intervene in currency markets to halt the yen’s appreciation. Hong Kong’s Hang Seng was down by 4.8% to 21 134.5 points to a major Chinese Shanghai Composite Index lost 2.4% to 3 096.3 points. Earlier this week exchanges in Shanghai, Chengen and Hong Kong dropped because of fears that planned by the major banks in China issues new shares will dilute the value of existing equity. Compared to last Friday the Nikkei 225 fell by 4,4%, Hang Seng – by 5.9% and Shanghai Composite has yielded at most 6.4%. Strong weekly decline of 5.9 percent and the broad record of the Exchange Kospi index in Seoul. It slid 4.7 percent to 1524.5 points, while Dubai is not expected to cause injury crisis on the Korean economy due to limited investment in South Korea in Dubai.
Australian Index of blue chip S & P / ASX 200 is lower by 2.9 percent to 4572.1 points, mainly due to mining and energy companies after metals prices and oil prices fell significantly during today’s e-commerce in Asia. In New Zealand NZX 50 is decreased by 1.1 percent to 3094.4 points, a weekly decline in two Pacific stock exchanges amounted to 2.4% and 0.6%. U.S. futures broader index S & P 500 shows a sharp drop in Wall Street, while European markets fell heavily yesterday, as the pan-European index Dow Jones Stoxx 600 slipped 3.3 percent. Red wool, which includes the stock exchange in Sofia shows that financial markets remain very sensitive to bad news relating to bankruptcies and financial difficulties of companies. The price of oil futures with delivery in January fell by more than 6% in electronic trading on the New York oil exchange. Prices of most metals is lower, led by copper, which is cheaper by almost 5%. Commodity prices are often an accurate indicator is the tendency of investors to buy riskier assets such as shares and high-currencies.