The victory for Japan’s ruling Liberal Democratic/New Komeito coalition in Sunday’s elections to the upper house puts Prime Minister Shinzo Abe in a commanding position. It raises big questions about Japan’s relations with the US, China and its other neighbours – and about Abe’s commitment to Abenomics, his three-part programme to revitalise Japan’s moribund economy.
But for some of Japan’s neighbours, a large part of the outcome may already be decided. And Frederic Neumann at HSBC says it is likely to be strongly positive. Read more
By Jeong Young-Sik of Samsung Economic Research Institute
With the won/yen exchange rate plummeting from 1,432 to 1,107 per 100 yen since last October, Korea’s exports, which largely compete head-to-head with Japan, are feeling the pinch. The true impact of the weak yen, however, has yet to be felt, as the real economy lags behind major moves in foreign exchange rates but there is little doubt that the effect will grow. Read more
Once when Japan sneezed the rest of Asia caught pneumonia. But with the rise of China and the rest, Japan no longer looms so large in the economies of other Asian countries.
The recent gyrations of the Japanese stock market seem to prove the point. The surge in the Nikkei since last autumn and its recent fall have had limited impact on other stock exchanges in the region. On Thursday, with the Nikkei down 5.1 per cent, the MSCI Asia ex-Japan index slipped only 0.5 per cent. Read more
Japan’s announcement in March that it would seek to join the trans-Pacific Partnership looked like great news for the US. The TPP, intended to lower trade barriers among some of Washington’s key trading partners in the Pacific region, is an important part of the Obama administration’s “rebalancing” to Asia – and having the continent’s second-biggest economy on board would give it greater clout.
But as US undersecretary of commerce Francisco Sánchez told beyondbrics on Tuesday, Washington still has concerns about Japanese trade policy – particularly in cars. Read more
As beyondbrics reported yesterday, Myanmar’s new trasparency zeal could be a nightmare for China, given the close relationship between the two nations on various projects.
So how are China’s investments in the country going? And which other countries are waiting in the wings? Read more
Asia’s emerging markets took the Bank of Japan’s latest radical monetary loosening in their stride, with fairly muted responses to governor Haruhiko Kuroda’s dramatic announcement.
While the Japanese stock market soared 2.2 per cent and the yen dropped 2.7 per cent against the dollar, the reaction elsewhere in east Asia was less than overwhelming. But this could change, as the implications sink in. Read more
Foreign direct investment into the Asean countries has risen strongly in the past few years and is now on a par with FDI into China. As Hak Bin Chua, Asean economist at Bank of America Merrill Lynch writes in a report on Friday, this “is in sharp contrast to a decade ago, when there were widespread fears that Asean would be marginalised by China’s rise.”
The change is partly a result of political issues such as recent territorial tensions between Japan and China which are diverting some Japanese investment south. But is is also driven by social and economic factors such as demographics that will not change direction any time soon. Read more
It’s traffic clogged streets are some of the most difficult and slow to navigate anywhere, but that’s not stopped the flood of businesses setting up offices or expanding in Jakarta.
The limited amount of prime office space – and the desire to beat the traffic by staying as close to the centre as possible – has seen Jakarta office rents shoot up by almost 80 per cent in the past year. Read more
KDDI and Sumitomo Corp, the dominant shareholders in JCom, Japan’s number one cable-TV company, have been waiting since October to launch an offer to mop up the shares they don’t own. And now, thanks to China, they’ll have to wait a little longer.
On Friday the pair announced that Beijing’s Ministry of Commerce (Mofcom) would not after all clear the Y759bn ($8.2bn) deal by early February, as they had earlier indicated it would. Read more
Remember the yen carry trade? Sure you do: when lots of smart people took advantage of Japan’s low interest rate to borrow and then invest in currencies with higher interest rates? (Ah, that carry trade.)
Well, with Japan’s new aggressive monetary stance, it’s back (in a way). And that should force EM currencies to appreciate, as before, shouldn’t it?
Perhaps not, according to Bhanu Banweja of UBS. Read more
It’s not just the Japanese carmakers that have suffered from their country’s territorial dispute with China.
Canon, the camera and office equipment manufacturer, reported on Wednesday that its sales in China fell by more than 30 per cent last year due, as the company put it, to a “cooling off of demand in China during the latter half of the year”.
The Beijing-Tokyo spat compounded difficulties caused by weak economic growth in Europe, consumers switching from cameras to smartphones, and the strength of the yen. The group’s results – and its 2013 forecast – fell well short of analysts’ forecasts. Read more
Japan’s thirst for liquefied natural gas is well known. Since the world’s third largest economy shut down almost all of its nuclear reactors following the Fukushima disaster last year, imports of the relatively clean-burning fuel have risen sharply, as utilities have scrambled for shipments anywhere they can find them. Even Belgium – a non-producing nation – showed up in Japan’s official list of LNG suppliers this year, after it re-routed tankers that had already passed customs.
Less well appreciated, however, is Africa’s vital role in meeting that demand. Read more
Japanese carmakers seem to be staring into the abyss in China, with buyers shunning Japanese cars since September, because of the Diaoyu islands dispute.
But AllianceBernstein analysts think this may be a passing phase. If they’re right, it could be an opportunity to buy Japanese car stocks, which are well down on the news from China. Read more
The Senkaku/Diaoyu islands barely show up on most maps of the world. But the impact of the big row between Japan and China over this tiny chain of islets in the East China Sea could be detected in September’s trade data from Tokyo, published on Monday.
Preliminary numbers from Japan’s finance ministry showed that the headline value of the country’s exports to its biggest trading partner slipped 1.3 per cent from August, on a seasonally-unadjusted basis. Read more
Japanese car sales in China last month have turned out just as bad as expected with the islands row constantly in the headlines.
The carmakers’ shares fell sharply as they revealed the extent of the hit – with Toyota Motor leading the way with a 49 per cent drop in sales compared to September 2011. Will October be any better? Investors clearly have their doubts. Read more
Korean companies could be forgiven some secret delight at rising sales in China as they benefit from anti-Japan sentiment in the world’s second-largest economy.
Hyundai Motor and its affiliate Kia Motors posted a record combined sales of 127,827 vehicles in China last month, up 9.5 per cent from a year earlier. Hyundai denied that it was benefiting from a wave of anti-Japan protests in the world’s largest auto market, attributing the sales increase instead to the growing popularity of its compact cars such as the Avante and Pride. Read more
Japan’s Toyota is cutting production of vehicles for the Chinese market amid tensions between the two countries over a cluster of islands in the East China Sea. Lex’s Stuart Kirk and Julia Grindell discuss what may be more a strategic than a reactive decision.
By Tim Taylor of SJ Berwin
Television pictures of rioting Chinese citizens are a startling demonstration of the seemingly spontaneous civic anger over Japan’s territorial claims to five uninhabited islands and three rocks known to Japanese as the Senkaku Islands and to the Chinese as the Diaoyu Islands.
At stake in the East China Sea (and in a separate row in the South China Sea) are not the barren rocks themselves but the oil and gas that might be found under surrounding waters. Oil majors contemplating investment need a primer in international law as well as an appreciation of the historical and political background before they venture into this region. Read more
Japan’s Mazda Motors has finally unveiled its long-awaited car assembly plant at the Russian Pacific port of Vladivostok.
To highlight the importance of a biggish manufacturing investment in the region, Russia’s president Vladimir Putin was in attendance, taking time off from hosting this week’s Asia Pacific Economic Co-operation summit.
Mazda brings a welcome boost to the neglected manufacturing base in Russia’s far east. But far larger investment is needed if the region is escape poverty and neglect and fulfil its huge potential. Read more
Now add tax
When Indonesia shook up its minerals tax regime in May, it might have expected a reaction – not least from Japan, which has poured more cash into the archipelago in the past two and a half years than any other non-Asean nation.
Mitsubishi Corp, the nation’s largest trading house by market capitalisation, is one of a number of inward investors unhappy at what it sees as quixotic policy making by the government of southeast Asia’s largest economy. Read more