FinanceAsia Magazine

Issue: August 2013

Japanese companies vote with their feet

So far we’ve not seen enough from Abenomics.

Japan’s Prime Minister Shinzo Abe has the ideas and the political power to push through his plan for economic revival, but the greatest fillip he has given the country’s economy so far is a weaker yen.

Investors need another trigger to chase Japan’s stock markets higher as they are already pricing for perfection. The benchmark Nikkei 225 index is trading on the richest price to earnings multiple among major bourses and at around a five-year high on a price-to-book basis after Abe unleashed fiscal stimulus and a radical monetary easing.

The world’s best performing major stock market of 2013 is well below its May highs and could not muster its spring-time buoyancy after Abe’s ruling coalition won control of Japan’s upper house on July 21.

Even the currency stubbornly refuses to rise above ¥100 to the dollar for long.

What would really convince investors that Abe means business would be if he took his third arrow out of his quiver and fired off some structural reforms. This could turn Abenomics from a short-term boost to sustainable economic growth. 

Musings about constitutional change only serve to make investors think his politicians are taking their eye off the ball, such as Deputy Prime Minster Taro Aso’s remarks about how to undermine a liberal constitution without the public noticing.

Abe may need his three-year mandate and more to see through long-deferred and controversial structural reforms such as liberalising Japan’s job market.

In the meantime, the Bank of Japan has said it will pursue its policy of unprecedented quantitative easing.

Star bond manager Michael Hasenstab at Franklin Templeton Investments tells FinanceAsia on Page 11 that he thinks Japan’s program will offset the Federal Reserve’s tapering of monetary stimulus. This wave of money from Japan could potentially overwhelm small, open economies such as Singapore. Money is fungible, whether it’s printed as dollars or as yen, he says.

If the Bank of Japan supplies even more cheap money to Japanese banks, they’ll continue to expand their foreign loan books and buy assets. We write about Japan Inc.’s record level of M&A in Southeast Asia on Page 18 as the country’s blue-chip companies desperately try to capture growth overseas.

 

About FinanceAsia Magazine

Established in 1996, FinanceAsia is the leading publisher of financial news in the Asia-Pacific region. Our combination of print and online products provide the latest news, analysis and insight into Asia’s financial markets.

Published monthly from our office in Hong Kong, FinanceAsia magazine provides our readers with the latest financial trends, interviews, features and investigative reports. The publication has a readership of key decision-makers at corporations, governments, investment and commercial banks, institutional investors, asset managers, brokers, traders and financial intermediaries.

Our regular sections include:

Data Story
We look at the key data behind a topical theme in Asian finance, showcased with an array of graphs and tables.

Greenshoe
A monthly opinion column from the FinanceAsia editorial team. We provide our thoughts on a topic making the headlines.

Deal of the Month
Our regular two-page spread with its signature artwork and in-depth analysis examines the equity, debt or M&A deal that we feel has had the biggest impact on the Asian capital markets that month.

Investor Dialogue
For company CEOs and CFOs, what investors think is a critical concern, and in this column we help them understand just this. Each month we speak to a Chief Investment Officer of a top fund and outline their views on corporate governance, what stocks they like and where they expect to generate the best returns.

Soapbox
A monthly opinion piece from a respected author or commentator on Asian business, finance or economics.

People on the Move
Here we summarise the key hires, fires and moves at the region’s banks, highlighting at least one major move each month.

Deal Tracker
We examine the major primary markets deals of the month and comment on the quality of the debt or equity transaction and the secondary market performance.

The Arts of Finance
A light-hearted look at investment opportunities surrounding the arts business in Asia.

 

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