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    BoJ Tapped to Taper

    In their policy meeting on September 20-21, the BoJ will be essentially admitting that they can no longer pursue 2% inflation rate target as ardently as they have been. The financial market will probably react negatively as it perceives the change as a step toward tapering. In our view, the result could be similar to what we observed in the US “taper tantrum” in 2013. Click here for the full report

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    BOJ: The 80 Trillion Yen Question

    The Bank of Japan July policy meeting ends tomorrow (Friday 29 July), and markets remain divided as to its outcome. Although expectations of easing are building (including, according to Nikkei reports, within the BOJ), we see reasons why the BOJ may choose to adopt more symbolic (and hence modest) easing measures than markets expect.

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    Corporate Governance May be the “Missing Link” for Japanese TFP

    Given (a) evidence that productivity in Japan is very strongly influenced by investment-specific technology (Fink, 2015), and (b) evidence that services sectors in the non-IT sector were “left behind” while manufacturing and IT sectors were able to capitalise on the technology boom, it makes sense to focus efforts on structural reform in the services sector. Still, as Fukao, Miyagawa and Hisa demonstrated in their 2012 paper,increasing intangible capital alone has proven no…

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  • UKBank

    BOJ: Geopolitical risk “trumps” all (for now)

    “I would hate to be one of the traders forced to make prices June 23-24.” A New York FX market-watcher – Geopolitical risk seems to be the over-arching theme this week; with market uncertainty (as we can see in stock weakness) over the UK referendum looming, neither the BOJ nor the Fed wished to take too hawkish a tone. – Add to this soft underlying inflation expectations (hence the weaker…

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  • Source: JNTO

    The Japanese economy, policy amid yen strength

    With earnings season in sight, one of the main questions is how Japan, Inc is handling the yen strength. Typically, a strong yen will affect large manufacturers through more indirect channels than in the past, given the globalisation of Japanese businesses, so a stronger yen will create no real incentive to repatriate income from abroad, rather than cripple firms directly through export revenues.  Still, Japan’s large corporations are seasoned currency…

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  • Fuji2

    Japan growth notes (H2 FY 2016)

    On Japan GDP in H2 FY 2016 – The negative Q4 annualised growth figure has been reinforced by soft data we have seen so far on household consumption, flatlining wages, and uncertainty on the external demand front, not to mention the yen’s rebound in times of increased risk-aversion. – Noting particularly on the external demand front the influence of volatility and uncertainty in Chinese growth, better-than-expected US payroll figures no…

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  • Source: ASEAN Tourism Board

    Asia and Australia in 2016: What Lies Ahead?

    We spoke to Asia Society on key regional and global events impacting Australia and Asia going into 2016, including: 1. INTERNATIONALISATION OF THE RMB Capital account deregulation has been picking up the pace in China, as has Chinese currency (RMB) internationalisation, as discussed at the recent Thomson Reuters – Europacifica RMB Thought Leadership seminar. One of the keynote speakers – Kathy Walsh – forecasts a foreshortened horizon for full internationalisation,…

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  • Source: Thomson Reuters

    The RMB in the SDR and why Australia Should Care

    The politics of the RMB in the SDR: Though US-China summits tend typically to be fraught with geopolitical tensions, the Xi-Obama summit last week provided one clear signal of solidarity on a seemingly minor topic, but one that might have eventual wide-reaching impact. The Obama administration softened its insistence upon Chinese domestic reform, instead showing greater support of the inclusion of the Chinese currency in the Special Drawing Rights basket…

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  • Fuji2

    Japanese economic recovery: resilience, amid slow inflation

    Economic data of late have shown more positive signals, from the upward revision in GDP to machinery orders and industrial production. While export growth has lagged, the trade gap has slowly narrowed and has even recovered (if temporarily) to surplus.  The BOJ meanwhile has placed emphasis on the recovery in housing investment from the growth side.   From the inflation standpoint, we are clearly on the lower side of BOJ…

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