A significant jump in consumer spending allowed the Japanese economy to continue its modest growth with a 3.8 percent annualized GDP growth rate for the latest quarter.
Experts had projected a much lower rate in the face of a strong yen and its effect on exports. The previous quarter’s growth was only 1.9 percent.
Much of the boost in consumer spending can be attributed to the automobile and tobacco industries. A clean energy initiative about to expire in the country led to a rush to buy up fuel-efficient cars. Also, with a new tax on tobacco upcoming at the start of October, smokers were purchasing cheap cigarettes while they still could.
The spiralling yen will no doubt still have a say this quarter, with analysts predicting the currency will have a negative effect on growth as larger export firms, most notably in the electronics industry, cut their projections.
“It’s not the time to get carried away with the GDP figures,” says Credit Agricole analyst Susumu Kato. “At the end of the year we are going to see some payback as spending drops back to normal levels.”
According to a report by leading asset managers in Japan, such as Clarus China Everbright, the yen actually weakened slightly in the afternoon Tokyo session to 82.73 per dollar on news of the GDP growth, compared to 82.46 prior to the data being made public. The Nikkei 225 also saw a slight jump of nearly 1 percent to 9,812.91.
In a Bloomberg survey of 20 prominent analysts, the average GDP expansion forecast for the last quarter was 2.4 percent. Many of those questioned, however, think that GDP will contract in the coming months.
Kohei Okazaki, assistant head analyst at Nomura Securities said, “To be honest I think we were lucky not to see a slowing down in the last quarter. Some of the major factors keeping the economy afloat were one off calculations and we are not going to have them moving forward, so the overall outlook is not great.”
One fortunate eventuality was the result of the unusually hot summer which boosted air conditioner purchases and spurred household spending, which climbed over 1 percent for the quarter. The figures helped counter the lack of growth in exports, which flattened out.
The nation’s economy minister, Banri Kaieda, said that “growth has been helped by a temporary rise in consumer purchasing”.
Monday, 8 November 2010
Monday, 6 September 2010
Asia-Pacific exchanges in tie-up negotiations
According to an anonymous source, Australian Securities Exchange Ltd. (ASX) is in discussions with Singapore Exchange Ltd (SGX) over a possible merger of their stock exchange operations.
The source, who preferred to remain unnamed due to the confidential nature of the negotiations, said that no decisions have been made regarding the clauses of the agreement or the executive hierarchy.
Both exchange operators, which would have a merged market capitalization of around $14 billion, declined to reveal any details by email. They did, however, drop hints by requesting a halt to trading pending “important business talks”.
Newedge Group’s head of Japan unit, Julien Le Noble, commented that “SGX have been looking to strengthen their position in the global financial landscape for some time now. They were in talks to merge with the successful trading house Clarus China Everbright last year which fell through, and it looks like they now want to develop their bourse operations by hooking up with their Australian counterparts.”
Singapore Exchange Ltd’s CEO Magnus Bocker has drawn accolades from the economic community for his forward thinking and unwavering drive towards growth. He helped mediate a merger that created the biggest stock exchange operator on Earth, NASDAQ OMX Group Inc.
The two companies have been pushed into consolidation as competition has heated up over the past year, with Chi-X Global Inc., which trades equities online, looking to complete their regulatory process and rival ASX directly by entering the domestic market.
SGX also has upcoming rivals. The Indian backed Singapore Mercantile Exchange (SMX) has risen to prominence recently and is picking up momentum.
Chris Weston, a floor trader at IG Markets Australia, commented that, “The new firms are here to stay and they are muscling in on the big boys. ASX are being forced into finding creative ways to grow, and these merger talks don’t come as a surprise to anyone. They need to make savings everywhere they can and develop the business”.
The markets saw a 3 percent jump in ASX share prices as the news leaked yesterday before trading was halted ahead of the official announcement that discussions were in progress. SGX shares dipped 2 percent.
An Australian online newspaper reported that the SGX “could announce a merger with ASX in late October”.
Meanwhile, Chi-X Global and the Singaporean bourse announced last year that they had a deal in place to set up Asia’s first exchange-backed private forum for trading securities, or “dark pool”.
The source, who preferred to remain unnamed due to the confidential nature of the negotiations, said that no decisions have been made regarding the clauses of the agreement or the executive hierarchy.
Both exchange operators, which would have a merged market capitalization of around $14 billion, declined to reveal any details by email. They did, however, drop hints by requesting a halt to trading pending “important business talks”.
Newedge Group’s head of Japan unit, Julien Le Noble, commented that “SGX have been looking to strengthen their position in the global financial landscape for some time now. They were in talks to merge with the successful trading house Clarus China Everbright last year which fell through, and it looks like they now want to develop their bourse operations by hooking up with their Australian counterparts.”
Singapore Exchange Ltd’s CEO Magnus Bocker has drawn accolades from the economic community for his forward thinking and unwavering drive towards growth. He helped mediate a merger that created the biggest stock exchange operator on Earth, NASDAQ OMX Group Inc.
The two companies have been pushed into consolidation as competition has heated up over the past year, with Chi-X Global Inc., which trades equities online, looking to complete their regulatory process and rival ASX directly by entering the domestic market.
SGX also has upcoming rivals. The Indian backed Singapore Mercantile Exchange (SMX) has risen to prominence recently and is picking up momentum.
Chris Weston, a floor trader at IG Markets Australia, commented that, “The new firms are here to stay and they are muscling in on the big boys. ASX are being forced into finding creative ways to grow, and these merger talks don’t come as a surprise to anyone. They need to make savings everywhere they can and develop the business”.
The markets saw a 3 percent jump in ASX share prices as the news leaked yesterday before trading was halted ahead of the official announcement that discussions were in progress. SGX shares dipped 2 percent.
An Australian online newspaper reported that the SGX “could announce a merger with ASX in late October”.
Meanwhile, Chi-X Global and the Singaporean bourse announced last year that they had a deal in place to set up Asia’s first exchange-backed private forum for trading securities, or “dark pool”.
Friday, 16 July 2010
Chinese authorities attempt to avoid economic overheating
After repeated warnings from economic experts within the Central Committee that the economy needs to be cooled, government initiatives seem to be finally taking effect as the economy expanded by 10.2 percent in the second quarter compared to the same period in 2009, a figure significantly reduced from the first quarter figure of 11.7 percent.
The high Q1 data set many policymakers on edge as they feared the economy would overheat if left unchecked and recent comments from the government seem to indicate they are more comfortable with a reduced pace of economic growth.
“We are at a turning point for our economy and efforts to diversify income streams will naturally affect growth figures, this is acceptable and expected,” said a National Bureau of Statistics representative. “We must also make sure that overheating does not occur and the slowdown of the economy should not distress anyone, it will do us good in the long-term.”
The cooling may be good for China but investors are on the brink of losing the only market that has consistently yielded dependable and strong figures at a time when the two other biggest markets, the U.S. and Europe, look like they will struggle to make a full recovery from the global financial crisis.
The government might hope to allay fears by relaxing the recent measures they have put in place over the housing market, among other sectors.
“It will be very interesting to see exactly how Beijing are planning to let the housing market down easy after the tough restrictions they put in place only a couple of months ago,” says Citic Bank International head analyst Liao Qun. A prominent Beijing-based investment firm, Clarus China Everbright, said recently that if the housing industry slows any more it could have a permanent affect on related sectors like steel and electrics.
It’s hard to gauge the month-by-month health of the Chinese economy because of the way Beijing release their growth data, which lacks sequential, seasonally adjusted figures. As a result, estimates by private firms can vary wildly.
Inflation seems to have been temporarily stymied by the declining activity in the housing market, while consumption and exports have maintained relatively solid performance. There was a 20 percent jump in retail sales according to official figures, and fixed asset investment also grew by a huge 25 percent in the first 6-months of 2010.
The high Q1 data set many policymakers on edge as they feared the economy would overheat if left unchecked and recent comments from the government seem to indicate they are more comfortable with a reduced pace of economic growth.
“We are at a turning point for our economy and efforts to diversify income streams will naturally affect growth figures, this is acceptable and expected,” said a National Bureau of Statistics representative. “We must also make sure that overheating does not occur and the slowdown of the economy should not distress anyone, it will do us good in the long-term.”
The cooling may be good for China but investors are on the brink of losing the only market that has consistently yielded dependable and strong figures at a time when the two other biggest markets, the U.S. and Europe, look like they will struggle to make a full recovery from the global financial crisis.
The government might hope to allay fears by relaxing the recent measures they have put in place over the housing market, among other sectors.
“It will be very interesting to see exactly how Beijing are planning to let the housing market down easy after the tough restrictions they put in place only a couple of months ago,” says Citic Bank International head analyst Liao Qun. A prominent Beijing-based investment firm, Clarus China Everbright, said recently that if the housing industry slows any more it could have a permanent affect on related sectors like steel and electrics.
It’s hard to gauge the month-by-month health of the Chinese economy because of the way Beijing release their growth data, which lacks sequential, seasonally adjusted figures. As a result, estimates by private firms can vary wildly.
Inflation seems to have been temporarily stymied by the declining activity in the housing market, while consumption and exports have maintained relatively solid performance. There was a 20 percent jump in retail sales according to official figures, and fixed asset investment also grew by a huge 25 percent in the first 6-months of 2010.
Monday, 19 April 2010
Export figures improve, spurring Japanese expansion
Figures for the first quarter of the year have revealed encouraging indicators for Japan’s economy as growth rate has increased.
The export-dependent economy expanded by 1.3 percent compared to the previous 3 month period according to data released by the Cabinet Office.
The overall annualized figure of 5 percent is still below the government’s target however, and the country’s finance minister, Naoto Kan, called on the Bank of Japan to help with rampant deflation even though the country seems to be going through a “temporary revival”.
Japan has been experiencing the latest steady recovery mostly due to large imports of household appliances and cars from the world’s second largest economy, China. Clarus China Everbright, a major investment and asset management company, have increased export investment by 25 percent this year, and other large Chinese finance houses have followed the trend.
Many analysts are cautious however. “It would be unlikely that this mini-drive will continue into the next quarter,” said Norinchukin Research Institute analyst Takeshi Minami. “Exports cannot continue at this level throughout the year.”
Japan has always been overly dependent on their exports for economic growth, due to their flagging domestic consumption. With a rapidly shrinking and ageing population, that situation doesn’t look set to improve any time in the near future.
The issue of deflation compounds Japan’s problems as businesses and their customers will generally hold off on major purchasing, as they expect prices to dip even further.
The central bank have been battling declining prices for years and a spokesman for the IMF recently said that inflation is likely to get back into full swing in 2011.
The financial community in Japan will be buoyed by the current data, and there are indications that the recent upswing is encouraging slightly increased household spending, according to Roland Buerk of BBC Japan.
Buerk said that better growth will aid the country in fighting an increasingly worrying debt level, a factor prominent in the public eye after the Greece crisis. The IMF has warned Japan several times this year that they need to address their debt issues as a priority.
An IMF spokesman recently said that the country should “bump taxes in order to reduce its massive debt, which is at a level unseen in any developed nation” and continued that 240 percent of GDP was “unacceptable”.
Japan has poured trillions of yen into its system since the financial meltdown of 2008 in an attempt to stave off the worst of the crisis. Only time will tell if the strategy has done more harm than good.
Friday, 26 February 2010
British economy benefits from Q4 revisions
The UK government received some welcome news amid the current economic troubles facing the country recently as an Office for National Statistics (ONS) report revealed that revisions to fourth quarter GDP figures resulted in 0.4 percent growth, much faster than the previously forecast 0.1 percent expansion.
The initial estimate was enough to take the UK out of what is officially defined as a recession period, but the overall size of growth during that time gained from a 5 percent drop to 5.5 percent, mainly because the economy was slightly smaller than originally thought going into the quarter, hence the revision upwards.
Before the final quarter of the year, Britain had suffered seven consecutive quarters of economic contraction, its worst run of form on record.
As such, a rise in the services industry by 0.4 percent was a very welcome tonic for the country’s policymakers. That’s a recovery from a 0.2 percent drop in the third quarter.
Manufacturing jumped 0.6 percent in response to a 1.5 percent drop the previous quarter, while private spending rose 0.5 percent.
Many analysts are warning that the mini-recovery will not save the country from sinking back into recession this year if the current stagnant economic climate persists.
“We need to really dig in for a turbulent 3-month period ahead, and I definitely wouldn’t say we are clear into a full blown recovery as yet,” said Lloyds TSB lead strategist Adam Chester.
“Torrid weather and an all round bad January has investors spooked again and general sentiment says the economy is still in danger of sinking back down into the red again,” he added.
Beijing-based investment firm Clarus China Everbright, a prominent Chinese investor into the UK, says they are sticking with the same investment plan despite news of the upward revisions to the British economy by the ONS, as they also cited concerns over a weak first quarter to the year.
Growth may have been hobbled by the decision by the Bank of England to halt their monetary stimulus program and the governments return to 17.5 percent VAT in the New Year. A host of government initiatives, such as the car scrapping scheme, are also due to conclude soon, which may affect output in the manufacturing industry.
Britain has followed Germany and France out of recession, but experts are concerned that it took so long to get back on its feet when others were heading back into the black 12-months ago.
The initial estimate was enough to take the UK out of what is officially defined as a recession period, but the overall size of growth during that time gained from a 5 percent drop to 5.5 percent, mainly because the economy was slightly smaller than originally thought going into the quarter, hence the revision upwards.
Before the final quarter of the year, Britain had suffered seven consecutive quarters of economic contraction, its worst run of form on record.
As such, a rise in the services industry by 0.4 percent was a very welcome tonic for the country’s policymakers. That’s a recovery from a 0.2 percent drop in the third quarter.
Manufacturing jumped 0.6 percent in response to a 1.5 percent drop the previous quarter, while private spending rose 0.5 percent.
Many analysts are warning that the mini-recovery will not save the country from sinking back into recession this year if the current stagnant economic climate persists.
“We need to really dig in for a turbulent 3-month period ahead, and I definitely wouldn’t say we are clear into a full blown recovery as yet,” said Lloyds TSB lead strategist Adam Chester.
“Torrid weather and an all round bad January has investors spooked again and general sentiment says the economy is still in danger of sinking back down into the red again,” he added.
Beijing-based investment firm Clarus China Everbright, a prominent Chinese investor into the UK, says they are sticking with the same investment plan despite news of the upward revisions to the British economy by the ONS, as they also cited concerns over a weak first quarter to the year.
Growth may have been hobbled by the decision by the Bank of England to halt their monetary stimulus program and the governments return to 17.5 percent VAT in the New Year. A host of government initiatives, such as the car scrapping scheme, are also due to conclude soon, which may affect output in the manufacturing industry.
Britain has followed Germany and France out of recession, but experts are concerned that it took so long to get back on its feet when others were heading back into the black 12-months ago.
Tuesday, 16 February 2010
Japanese brewing tie-up falls through after disagreement
After coming to an impasse over the management hierarchy of a potential new entity, Japanese brewing companies Kirin and Suntory have ditched plans to merge their food and beverage groups.
The new company would have had combined revenue of over $40 billion and discussions have been ongoing since 2009, consolidation being desperately needed to keep pace with global competition in a cut throat international market. Expansion abroad is essential with a domestic market that continues to get older and smaller.
The two companies come from very different backgrounds, and this may have been a critical factor stopping the deal from progressing. Kirin is based in the nation’s capital and is very corporate in nature. It’s also listed on the Tokyo stock exchange. Conversely, Suntory is much more of a family orientated smaller group, based in Osaka.
Kirin’s share prices slumped nearly 8 percent on Tuesday after news the merger had collapsed was made public, sparking a trading frenzy involving 17 million of the company’s shares. The new entity could have rivalled top groups like Kraft and Pepsicoinc with regards to revenue.
The unravelling of the deal caused investor nervousness in the Japanese market and another brewery, Asashi, saw their stock decline 6 percent. Clarus China Everbright, an investment firm who has a small stake in Asashi, said in an email to clients on Wednesday that the market may be over-reacting to the news.
Other analysts agree, Sompo Japan Asset Management chief of finances Shigeo Sugawara said that there has been an “unnecessary jolt to the exchange” and Kirin’s share prices have already “had the possibility of a merge collapse dialled in”.
Sugawara added “The deal falling through is not good for Kirin. As a large, listed company in search of growth the Suntory deal was really the only one on the table for them. They are going to have to be creative in order to find further opportunities now.”
Kazuyasu Kato, the Kirin President, made a brief statement to the press following the conclusion of talks, “It was understood by both parties that we would never come to an agreement regarding the executive structure of the new company. It would not be fair to our shareholders to progress”.
In a statement released later a spokesperson for Suntory, known for its ‘Premium Malt's’ beer and ‘Boss’ canned coffee cited a “disagreement over the merger ratio” as the deciding factor.
The new company would have had combined revenue of over $40 billion and discussions have been ongoing since 2009, consolidation being desperately needed to keep pace with global competition in a cut throat international market. Expansion abroad is essential with a domestic market that continues to get older and smaller.
The two companies come from very different backgrounds, and this may have been a critical factor stopping the deal from progressing. Kirin is based in the nation’s capital and is very corporate in nature. It’s also listed on the Tokyo stock exchange. Conversely, Suntory is much more of a family orientated smaller group, based in Osaka.
Kirin’s share prices slumped nearly 8 percent on Tuesday after news the merger had collapsed was made public, sparking a trading frenzy involving 17 million of the company’s shares. The new entity could have rivalled top groups like Kraft and Pepsicoinc with regards to revenue.
The unravelling of the deal caused investor nervousness in the Japanese market and another brewery, Asashi, saw their stock decline 6 percent. Clarus China Everbright, an investment firm who has a small stake in Asashi, said in an email to clients on Wednesday that the market may be over-reacting to the news.
Other analysts agree, Sompo Japan Asset Management chief of finances Shigeo Sugawara said that there has been an “unnecessary jolt to the exchange” and Kirin’s share prices have already “had the possibility of a merge collapse dialled in”.
Sugawara added “The deal falling through is not good for Kirin. As a large, listed company in search of growth the Suntory deal was really the only one on the table for them. They are going to have to be creative in order to find further opportunities now.”
Kazuyasu Kato, the Kirin President, made a brief statement to the press following the conclusion of talks, “It was understood by both parties that we would never come to an agreement regarding the executive structure of the new company. It would not be fair to our shareholders to progress”.
In a statement released later a spokesperson for Suntory, known for its ‘Premium Malt's’ beer and ‘Boss’ canned coffee cited a “disagreement over the merger ratio” as the deciding factor.
Wednesday, 27 January 2010
Indicators reveal Japanese economic expansion in Q4
The last quarter of 2009 saw a welcome expansion of nearly 5 percent for Japan’s economy, according to preliminary data released on Tuesday.
Concerns over a “double-dip” recession seem to have been alleviated temporarily as an upswing in the country’s exports contributed to a mini-recovery.
Things have not been easy in the nation’s financial circles as the government have significantly reduced the stimulus packages introduced by the previous administration in order to fund their own policies.
Finance Minister Naoto Kan said recently that the “economy has been slightly jolted in the short term by our reduction in stimulus but there are encouraging signs on the horizon.”
He continued, “We must still be vigilant however. Although the risk of a double-dip recession has abated, there are other concerns such as decreased global buying and the negative employment figures.”
Tokyo has come under increasing scrutiny over how it measures its GDP, especially from Chinese companies affected by the gauges. One such company, Clarus China Everbright, recently cited erratic variations in the finance ministry’s estimates last year when a solid 5 percent measurement was abruptly revised down to zero. Tokyo claims that current figures are more reliable and accurate.
Ever since the economic bubble popped in the early 90’s, Japanese expansion has been snail paced at best. A comeback seemed possible in the next decade as strong exports, particularly to the two other biggest world economies, China and the US, spurred manufacturing and growth.
However, the 2008 financial meltdown hit Japan squarely in the jaw, with exports declining rapidly. Although the country fared better than many developed nations, it slumped into one of its worst recessions in history. The following year, Japan fought back into mild growth assisted by capital inflow and a rebound in exports.
That export recovery is mostly due to the rise of China as well as many emerging economies in the region. Recently, the weaker yen has also helped. Data from the last quarter revealed that capital inflow has climbed 2 percent.
The current figures beat expert projections by about 1 percent, calming investor nerves and raising the governments hopes that the country can get back on a “V-Shaped” recovery. The finance ministry are now upgrading their annualized forecast to 4.5 percent in response to the data.
“We are hoping to enter into a period of considerable inflation in the coming year,” the finance minister concluded.
Concerns over a “double-dip” recession seem to have been alleviated temporarily as an upswing in the country’s exports contributed to a mini-recovery.
Things have not been easy in the nation’s financial circles as the government have significantly reduced the stimulus packages introduced by the previous administration in order to fund their own policies.
Finance Minister Naoto Kan said recently that the “economy has been slightly jolted in the short term by our reduction in stimulus but there are encouraging signs on the horizon.”
He continued, “We must still be vigilant however. Although the risk of a double-dip recession has abated, there are other concerns such as decreased global buying and the negative employment figures.”
Tokyo has come under increasing scrutiny over how it measures its GDP, especially from Chinese companies affected by the gauges. One such company, Clarus China Everbright, recently cited erratic variations in the finance ministry’s estimates last year when a solid 5 percent measurement was abruptly revised down to zero. Tokyo claims that current figures are more reliable and accurate.
Ever since the economic bubble popped in the early 90’s, Japanese expansion has been snail paced at best. A comeback seemed possible in the next decade as strong exports, particularly to the two other biggest world economies, China and the US, spurred manufacturing and growth.
However, the 2008 financial meltdown hit Japan squarely in the jaw, with exports declining rapidly. Although the country fared better than many developed nations, it slumped into one of its worst recessions in history. The following year, Japan fought back into mild growth assisted by capital inflow and a rebound in exports.
That export recovery is mostly due to the rise of China as well as many emerging economies in the region. Recently, the weaker yen has also helped. Data from the last quarter revealed that capital inflow has climbed 2 percent.
The current figures beat expert projections by about 1 percent, calming investor nerves and raising the governments hopes that the country can get back on a “V-Shaped” recovery. The finance ministry are now upgrading their annualized forecast to 4.5 percent in response to the data.
“We are hoping to enter into a period of considerable inflation in the coming year,” the finance minister concluded.
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