Japan's economy grew an annualized real 4.9 percent in the January- March quarter for the fourth consecutive quarter of expansion, the government said Thursday.
The expansion, as measured by gross domestic product, corresponds to a 1.2 percent growth from the October-December quarter, the Cabinet Office said in a preliminary report.
The figures compare with the average market forecasts of an annualized 5.6 percent increase and 1.4 percent quarterly growth in a Kyodo News survey.
GDP is the total value of goods and services produced domestically. Real GDP data are adjusted for price and seasonal variations.
Japan's GDP in fiscal 2009 that ended March 31 shrank 1.9 percent from the previous year.
In the latest quarter, consumer spending -- which makes up about 60 percent of Japanese GDP -- increased a real 0.3 percent from the October-December period.
Corporate capital spending rose 1.0 percent.
Public investment decreased 1.7 percent.
On an unadjusted nominal basis, GDP rose an annualized 4.9 percent in the reporting period, which corresponds to a 1.2 percent expansion from the previous quarter.
http://www.breitbart.com/article.php?id=D9FQ7V0O0&show_article=1
Thursday, May 27, 2010
Debtors Using New Debt Moratorium Law
Leading Japanese banks have received a total of some 72,000 applications for the easing of loan repayment terms from small and midsize companies and homeowners under the so-called debt moratorium law that took effect in December last year, the banks said Monday.
The applications involved 3.26 trillion yen and 1,361 of them were rejected, the banks said.
The total number of applications represents an increase of around 17,000 from the end of February, according to the four banks which also include Mizuho Bank, Sumitomo Mitsui Banking Corp. and Resona Bank.
The law allows moratoriums on debt owed by smaller businesses and homeowners to support those hit by the global financial crisis. It is designed to encourage banks and other financial institutions to relax repayment terms, such as by extending repayment deadlines, for financially strapped smaller companies and individuals with home loans who apply to do so.
Under the new legislation which is credited with a recent decrease in corporate bankruptcies, financial institutions can judge whether they should change the terms of loans. But they are obliged to report their lending conditions to the Financial Services Agency so that the nation's financial watchdog can check for unfair terms.
http://www.breitbart.com/article.php?id=D9FOHBJ80&show_article=1
The applications involved 3.26 trillion yen and 1,361 of them were rejected, the banks said.
The total number of applications represents an increase of around 17,000 from the end of February, according to the four banks which also include Mizuho Bank, Sumitomo Mitsui Banking Corp. and Resona Bank.
The law allows moratoriums on debt owed by smaller businesses and homeowners to support those hit by the global financial crisis. It is designed to encourage banks and other financial institutions to relax repayment terms, such as by extending repayment deadlines, for financially strapped smaller companies and individuals with home loans who apply to do so.
Under the new legislation which is credited with a recent decrease in corporate bankruptcies, financial institutions can judge whether they should change the terms of loans. But they are obliged to report their lending conditions to the Financial Services Agency so that the nation's financial watchdog can check for unfair terms.
http://www.breitbart.com/article.php?id=D9FOHBJ80&show_article=1
Poiice to Share Yakuza Data with Financial Sector
Japanese police will share information on yakuza crime syndicates with the country's securities industry to help drive the mobsters out of the financial sector, police said Wednesday.
The National Police Agency will open its database of tens of thousands of names believed to be linked with organised crime to the Japan Securities Dealers Association (JSDA), police and the industry body said.
The new database will enable the industry body's 302 companies and 222 organisations, including banks and insurance firms, to check clients' backgrounds quickly.
Both sides are now working out how to set up the new system, the first such cooperation between national police and an industry body, and the Japanese Bankers Association is considering a similar database.
Members will be obliged to question clients on whether they belong to a crime syndicate and refuse to deal with known gangsters, police said.
Japanese police have a database of about 38,000 yakuza-affiliated individuals, while there are believed to be more than 80,000 gangsters, including low-ranking members, in Japan.
http://news.asiaone.com/News/Latest%2BNews/Business/Story/A1Story20100526-218629.html
The National Police Agency will open its database of tens of thousands of names believed to be linked with organised crime to the Japan Securities Dealers Association (JSDA), police and the industry body said.
The new database will enable the industry body's 302 companies and 222 organisations, including banks and insurance firms, to check clients' backgrounds quickly.
Both sides are now working out how to set up the new system, the first such cooperation between national police and an industry body, and the Japanese Bankers Association is considering a similar database.
Members will be obliged to question clients on whether they belong to a crime syndicate and refuse to deal with known gangsters, police said.
Japanese police have a database of about 38,000 yakuza-affiliated individuals, while there are believed to be more than 80,000 gangsters, including low-ranking members, in Japan.
http://news.asiaone.com/News/Latest%2BNews/Business/Story/A1Story20100526-218629.html
Japan Leisure Hotels Law to Change
Articles in today's Nikkei and other major Japanese newspapers report on the announcement by the National Police Agency of implementation of changes to the Japanese "fuieho" (Entertainment Law) which will come into effect on 1 January 2011.
The article says this is first change in 26 years for the industry. The Police say that they currently have 3,590 hotels registered as "love hotels" under the fueiho ho; however, there are more than 30,000 other hotels which act in a similar way.
The NPA are trying to bring this industry under their supervision by requiring hotels which are defined as "love hotels" to require licensing from the Police and the Police say that they expect that the number of hotels subject to their jurisdiction will substantially increase.
Under the new laws, hotels will be defined as "love hotels" if they
1.advertise day time pricing or
2.allow customers direct access to rooms or
3. use the "in room payment machines" which have long been a "grey area" in this industry.
This is quite a significant development for this large Japanese industry - which some say is larger than Toyota - because licensing by the Police will reduce valuations of hotels and also liquidity in this market segment.
Due to the negative impacts on valuation and liquidity for hotels under Police licensing, we can expect cashed up hotel owners to renovate their properties so that they do not fall within the above definition of "love hotels"; but owners without the necessary funds will be in a difficult situation and will be squeezed.
Shinsei Bank and listed Japanese property fund, Kenedix both have direct holdings in leisure hotels and they may be required to dispose of these assets by TSX rules if the new laws impact their hotels.
They will be selling into a buyers market.
Previous post on Leisure Hotels - http://japanrealestatecommentary.blogspot.com/2010/01/japanese-retail-investors-look-to.html
http://www.nikkei.com/news/latest/article/g=96958A9C93819695E0E4E2E7968DE0E5E2E7E0E2E3E29180E2E2E2E2
http://www.jiji.com/jc/zc?key=%C9%F7%B1%C4%CB%A1&k=201005/2010052700249
http://mainichi.jp/select/wadai/news/20100527k0000e040019000c.html
http://sankei.jp.msn.com/affairs/crime/100527/crm1005271040012-n1.htm
The article says this is first change in 26 years for the industry. The Police say that they currently have 3,590 hotels registered as "love hotels" under the fueiho ho; however, there are more than 30,000 other hotels which act in a similar way.
The NPA are trying to bring this industry under their supervision by requiring hotels which are defined as "love hotels" to require licensing from the Police and the Police say that they expect that the number of hotels subject to their jurisdiction will substantially increase.
Under the new laws, hotels will be defined as "love hotels" if they
1.advertise day time pricing or
2.allow customers direct access to rooms or
3. use the "in room payment machines" which have long been a "grey area" in this industry.
This is quite a significant development for this large Japanese industry - which some say is larger than Toyota - because licensing by the Police will reduce valuations of hotels and also liquidity in this market segment.
Due to the negative impacts on valuation and liquidity for hotels under Police licensing, we can expect cashed up hotel owners to renovate their properties so that they do not fall within the above definition of "love hotels"; but owners without the necessary funds will be in a difficult situation and will be squeezed.
Shinsei Bank and listed Japanese property fund, Kenedix both have direct holdings in leisure hotels and they may be required to dispose of these assets by TSX rules if the new laws impact their hotels.
They will be selling into a buyers market.
Previous post on Leisure Hotels - http://japanrealestatecommentary.blogspot.com/2010/01/japanese-retail-investors-look-to.html
http://www.nikkei.com/news/latest/article/g=96958A9C93819695E0E4E2E7968DE0E5E2E7E0E2E3E29180E2E2E2E2
http://www.jiji.com/jc/zc?key=%C9%F7%B1%C4%CB%A1&k=201005/2010052700249
http://mainichi.jp/select/wadai/news/20100527k0000e040019000c.html
http://sankei.jp.msn.com/affairs/crime/100527/crm1005271040012-n1.htm
Monday, May 3, 2010
Household Asset Management and Spending Patterns
Share prices are picking up worldwide amid a growing sense that the global economy has finally hit bottom. However, we see no big change in the conservative ways Japanese households are managing their assets, which are mainly savings accounts.
The recent jumps in share prices in Japan are largely attributable to nonresident investors. Why? At a time when the public is scrutinizing the benefits of the Democratic Party of Japan's child-care allowances, there are several factors that explain why Japanese households aren't changing the way they manage their money.
The first is that the aftershocks from the collapse of the late 1980s bubble economy and the 2008 Lehman Brothers shock are still reverberating, reinforcing the traditionally conservative behavior of Japanese households. Although many households have invested some of their long-term holdings in stocks, they still have bitter memories of the two stock market crashes, and day trading — the online phenomena that empowered individual investors — hasn't been able to fully recover since the Livedoor shock.
The second factor is that fear of unemployment continues to haunt the economy. Joblessness among the younger generation remains particularly severe: A joint survey by the health and education ministries said that only 80 percent of university graduates had secured employment promises as of March 1. No official data had been released on the situation as of April 1, but estimates put the figure at under 90 percent this year, meaning one in 10 graduates lacked job prospects upon leaving school.
The employed have their own problems. Wages after tax and social security deductions are still shrinking and pay hikes are not on the horizon, if the outcome of this year's labor-management talks are any indication. It's no wonder households remain risk-averse when managing their money.
The Greek debt problem meanwhile adds a third element. Greece,while creating a drag on the EU economy as a whole, is highlighting the risk of Japan's huge public-sector debt. It is now obvious that the reductions in wasteful government spending promised by the DPJ won't be enough to cover the shortfall in tax revenue, and some overseas ratings agencies have been hinting that they might downgrade Japanese government bond ratings.
A fourth element is that the public has become cautious about investing in foreign currencies. They are being reminded that gains from betting on the interest rate differentials between Japan and other countries can be instantly wiped out by fluctuations in exchange rates. According to recent data, the value of foreign currency-denominated investment trusts has declined to roughly 70 percent of its peak of ¥67.1 trillion achieved in October 2007.
Following recent talks between China and the United States, speculation is growing that China's currency, the yuan, may soon appreciate. Speculation that the yen might go along for the ride have pushed investors to be even more cautious. On the other hand, expectations for a higher yen appear to be one of the factors driving nonresident investors to buy Japanese shares.
A fifth factor is being provided by Japan's old nemesis, deflation, and the government's own admissions that prices are likely to keep falling. This means that under current conditions, throwing your money into a bank remains one of the best "high return, low risk" ways to manage your funds. This is because that, even though interest rates are still near zero, falling prices will increase your purchasing power. In other words, there is no need to engage in financial transactions that will increase your risk.
People are of course aware of the risk that banks might collapse. Coupled with the government's review of Japan Post's banking operations, financial institutions — particularly small local banks — face tough times ahead. But people also know they have the final say over which banks to use, and there is a growing sense that using guaranteed bank deposits is safer than investing in government bonds that are increasingly at risk of being downgraded.
As has been pointed out by the the Organization for Economic Cooperation and Development, Japan's fiscal deficits are not cyclical but structural in nature. We need to closely monitor how the DPJ intends to restrain the nation's swelling budget deficits.
http://search.japantimes.co.jp/cgi-bin/nb20100426jp.html
The recent jumps in share prices in Japan are largely attributable to nonresident investors. Why? At a time when the public is scrutinizing the benefits of the Democratic Party of Japan's child-care allowances, there are several factors that explain why Japanese households aren't changing the way they manage their money.
The first is that the aftershocks from the collapse of the late 1980s bubble economy and the 2008 Lehman Brothers shock are still reverberating, reinforcing the traditionally conservative behavior of Japanese households. Although many households have invested some of their long-term holdings in stocks, they still have bitter memories of the two stock market crashes, and day trading — the online phenomena that empowered individual investors — hasn't been able to fully recover since the Livedoor shock.
The second factor is that fear of unemployment continues to haunt the economy. Joblessness among the younger generation remains particularly severe: A joint survey by the health and education ministries said that only 80 percent of university graduates had secured employment promises as of March 1. No official data had been released on the situation as of April 1, but estimates put the figure at under 90 percent this year, meaning one in 10 graduates lacked job prospects upon leaving school.
The employed have their own problems. Wages after tax and social security deductions are still shrinking and pay hikes are not on the horizon, if the outcome of this year's labor-management talks are any indication. It's no wonder households remain risk-averse when managing their money.
The Greek debt problem meanwhile adds a third element. Greece,while creating a drag on the EU economy as a whole, is highlighting the risk of Japan's huge public-sector debt. It is now obvious that the reductions in wasteful government spending promised by the DPJ won't be enough to cover the shortfall in tax revenue, and some overseas ratings agencies have been hinting that they might downgrade Japanese government bond ratings.
A fourth element is that the public has become cautious about investing in foreign currencies. They are being reminded that gains from betting on the interest rate differentials between Japan and other countries can be instantly wiped out by fluctuations in exchange rates. According to recent data, the value of foreign currency-denominated investment trusts has declined to roughly 70 percent of its peak of ¥67.1 trillion achieved in October 2007.
Following recent talks between China and the United States, speculation is growing that China's currency, the yuan, may soon appreciate. Speculation that the yen might go along for the ride have pushed investors to be even more cautious. On the other hand, expectations for a higher yen appear to be one of the factors driving nonresident investors to buy Japanese shares.
A fifth factor is being provided by Japan's old nemesis, deflation, and the government's own admissions that prices are likely to keep falling. This means that under current conditions, throwing your money into a bank remains one of the best "high return, low risk" ways to manage your funds. This is because that, even though interest rates are still near zero, falling prices will increase your purchasing power. In other words, there is no need to engage in financial transactions that will increase your risk.
People are of course aware of the risk that banks might collapse. Coupled with the government's review of Japan Post's banking operations, financial institutions — particularly small local banks — face tough times ahead. But people also know they have the final say over which banks to use, and there is a growing sense that using guaranteed bank deposits is safer than investing in government bonds that are increasingly at risk of being downgraded.
As has been pointed out by the the Organization for Economic Cooperation and Development, Japan's fiscal deficits are not cyclical but structural in nature. We need to closely monitor how the DPJ intends to restrain the nation's swelling budget deficits.
http://search.japantimes.co.jp/cgi-bin/nb20100426jp.html
March - General Data & BoJ's GDP Forecast Improves
In its semiannual outlook, the Bank of Japan predicted that the world's second biggest economy would see faster growth this fiscal year, which began April 1, and a possible end to deflation within two years. Gross domestic product will probably expand 1.8 percent this year, the central bank said, better than its previous forecast of 1.3 percent.
The report credited robust growth in overseas markets, particularly in Asia, for fueling Japanese exports and production. Stock prices and corporate profits are up. That should boost capital expenditures and eventually lead to more jobs, higher wages and stronger domestic demand.
"Given these developments, the momentum for a self-sustaining recovery in private consumption is likely to build gradually," the BOJ said.
Government data Friday showed that the country's recovery, though advancing, remains uneven. Unemployment worsened, and prices continued to fall in March. At the same time, household spending rose and factory output expanded.
Japan's seasonally adjusted jobless rate rose to 5 percent in the first increase in five months. The figure is up from 4.9 percent in February. The number of jobless totaled 3.5 million during the month, up 4.5 percent from a year earlier. Those with jobs fell 0.6 percent to 62.1 million.
Goldman Sachs economist Chiwoong Lee describes the labor market as having "no spark."
"Viewed over several months, the path is flat," he said in a note to clients. "Deterioration has eased but not given way to improvement."
That has dragged prices lower as stores scramble to attract increasingly finicky consumers.
Japan's core consumer price index, which excludes prices of fresh food, declined 1.2 percent in March from a year earlier. The result marked the 13th straight month of decline. Prices fell for a swath of goods from fuel to furniture.
Core CPI for the Tokyo area, seen as a barometer of future price trends nationwide, retreated 1.9 percent in April. In its report, the central bank said CPI may turn positive next fiscal year starting April 2011.
Preliminary data show industrial production edged up 0.3 percent in March from the previous month on growing export demand.
The government also said household spending during the month jumped a real 4.4 percent from a year earlier. Economists credit the solid figure to tax breaks and other government incentives to spur shopping. But they warn that consumption may wane once the programs end later this year.
http://news.yahoo.com/s/ap/20100430/ap_on_bi_ge/as_japan_economy_5
The report credited robust growth in overseas markets, particularly in Asia, for fueling Japanese exports and production. Stock prices and corporate profits are up. That should boost capital expenditures and eventually lead to more jobs, higher wages and stronger domestic demand.
"Given these developments, the momentum for a self-sustaining recovery in private consumption is likely to build gradually," the BOJ said.
Government data Friday showed that the country's recovery, though advancing, remains uneven. Unemployment worsened, and prices continued to fall in March. At the same time, household spending rose and factory output expanded.
Japan's seasonally adjusted jobless rate rose to 5 percent in the first increase in five months. The figure is up from 4.9 percent in February. The number of jobless totaled 3.5 million during the month, up 4.5 percent from a year earlier. Those with jobs fell 0.6 percent to 62.1 million.
Goldman Sachs economist Chiwoong Lee describes the labor market as having "no spark."
"Viewed over several months, the path is flat," he said in a note to clients. "Deterioration has eased but not given way to improvement."
That has dragged prices lower as stores scramble to attract increasingly finicky consumers.
Japan's core consumer price index, which excludes prices of fresh food, declined 1.2 percent in March from a year earlier. The result marked the 13th straight month of decline. Prices fell for a swath of goods from fuel to furniture.
Core CPI for the Tokyo area, seen as a barometer of future price trends nationwide, retreated 1.9 percent in April. In its report, the central bank said CPI may turn positive next fiscal year starting April 2011.
Preliminary data show industrial production edged up 0.3 percent in March from the previous month on growing export demand.
The government also said household spending during the month jumped a real 4.4 percent from a year earlier. Economists credit the solid figure to tax breaks and other government incentives to spur shopping. But they warn that consumption may wane once the programs end later this year.
http://news.yahoo.com/s/ap/20100430/ap_on_bi_ge/as_japan_economy_5
2009 - Jobless Rate worst since 2002
Seasonally adjusted unemployment rate rose to 5.2 percent in fiscal 2009, deteriorating for the second straight year and topping the 5 percent mark for the first time in six years as the global economic downturn put pressure on payrolls, government data showed Friday
The rate, which rose 1.1 percentage points from the previous year, was the second worst on record after 5.4 percent in fiscal 2002, the Ministry of Internal Affairs and Communications said in a preliminary report.
During the 12 months, a separate report by the labor ministry said, the ratio of job offers to job seekers was at a seasonally adjusted 0.45, down from 0.77 in fiscal 2008 to the lowest ever level. The ratio means there were 45 jobs available for every 100 job seekers.
The readings reflected a tough employment condition as companies reduced their payrolls amid the lingering effect of the global financial turmoil in 2008 and subsequent economic downturn.
But there are mixed views, given the recovery of the Japanese economy.
"After the unemployment rate peaked in July (at 5.6 percent), Japan has recovered at a relatively fast rate among developed countries," said Kyohei Morita, chief economist at Barclays Capital Japan Ltd. "That is largely due to improving global economic conditions and subsequent recoveries in Japanese exports. I think we don't need to worry about a double-dip recession."
In March alone, the jobless rate deteriorated to 5.0 percent from 4.9 percent in February due largely to sluggish conditions for manufacturers. The result, which marked the first deterioration in four months, was worse than the average market forecast of 4.9 percent in a Kyodo News survey.
The number of jobless people was 3.5 million, up 150,000 from a year earlier for the 17th consecutive month of increase, said the internal affairs ministry.
A total of 1.11 million people lost their jobs involuntarily, or due to their employers' decisions, up 50,000 on year.
The number of jobholders fell 350,000 to 62.1 million for the 26th consecutive month of decline.
The ratio of job offers to job seekers was at 0.49 in March, up from 0.47 for the third straight month of improvement and recovering to levels unseen since March last year, the Health, Labor and Welfare Ministry said.
http://www.breitbart.com/article.php?id=D9FD509O1&show_article=1
The rate, which rose 1.1 percentage points from the previous year, was the second worst on record after 5.4 percent in fiscal 2002, the Ministry of Internal Affairs and Communications said in a preliminary report.
During the 12 months, a separate report by the labor ministry said, the ratio of job offers to job seekers was at a seasonally adjusted 0.45, down from 0.77 in fiscal 2008 to the lowest ever level. The ratio means there were 45 jobs available for every 100 job seekers.
The readings reflected a tough employment condition as companies reduced their payrolls amid the lingering effect of the global financial turmoil in 2008 and subsequent economic downturn.
But there are mixed views, given the recovery of the Japanese economy.
"After the unemployment rate peaked in July (at 5.6 percent), Japan has recovered at a relatively fast rate among developed countries," said Kyohei Morita, chief economist at Barclays Capital Japan Ltd. "That is largely due to improving global economic conditions and subsequent recoveries in Japanese exports. I think we don't need to worry about a double-dip recession."
In March alone, the jobless rate deteriorated to 5.0 percent from 4.9 percent in February due largely to sluggish conditions for manufacturers. The result, which marked the first deterioration in four months, was worse than the average market forecast of 4.9 percent in a Kyodo News survey.
The number of jobless people was 3.5 million, up 150,000 from a year earlier for the 17th consecutive month of increase, said the internal affairs ministry.
A total of 1.11 million people lost their jobs involuntarily, or due to their employers' decisions, up 50,000 on year.
The number of jobholders fell 350,000 to 62.1 million for the 26th consecutive month of decline.
The ratio of job offers to job seekers was at 0.49 in March, up from 0.47 for the third straight month of improvement and recovering to levels unseen since March last year, the Health, Labor and Welfare Ministry said.
http://www.breitbart.com/article.php?id=D9FD509O1&show_article=1
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