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from Global Investing:

Tokyo Sonata calls the tune for investors

The jury may be out on whether Messrs. Abe and Kuroda will succeed in cajoling the Japanese economy from its decades-long funk but the cash is betting they will. Domestic and foreign investors have stampeded for Tokyo equities, and Morgan Stanley has been crunching the numbers.

Since 2005, Japanese investors built up a 14 trillion yen (over $140 billion) portfolio of foreign equities. But between January-March 2013, they offloaded a third of this -- about $39 billion.  Going back to July 2012 when they first started bringing cash home, the Japanese have sold $53 billion in foreign equities, or 36 percent of equity holdings.

If one were to include all foreign portfolio investments, they sold a net $74 billion worth of assets in the first three months of 2013. Morgan Stanley says this is the the most since 2005. You can see their graphic below (click on it for a bigger version).

 

Not surprising then that the Nikkei has been on a roll with returns of  34 percent this year. Aside from the Japanese money, foreign cash has also flooded in -- foreigners have bought $23 billion worth of Japanese equities in the first two months of 2013, according to Japanese government data.  Broadly, that is a 7 percent rise in cumulative holdings. Asian investors' holdings alone have jumped 26 percent.

from Breakingviews:

Japan lifts Nomura from its lost half decade

By Peter Thal Larsen

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Nomura has spent most of the past five years trying to break out of Japan. So it’s ironic that the investment bank’s best full-year results since 2007 were propelled by a revival at home. As with Japan’s economic renaissance, however, investors’ hopes are running ahead of reality.

from Breakingviews:

Return to glory days may elude Japan’s automakers

By Antony Currie

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

The weakening yen is good news for Japan’s automakers. The more than 20 percent drop in the currency’s value against the dollar since early October will boost profit from overseas sales - and probably market share, too. A return to the glory days of 2006, though, is likely to prove elusive.

from Breakingviews:

Japanese workers need to go back to the 1980s

By Andy Mukherjee

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Japanese workers are hoping for a 1980s revival. If the Bank of Japan’s 2 percent inflation goal appears daunting, meeting it in two years - as promised by new chief Haruhiko Kuroda - is even more of a challenge. For the central bank to succeed, wages will have to grow faster than they have in the past two decades.

from Breakingviews:

IMF crowd should cut Japan some slack

By Christopher Swann

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

The crowds gathering for the International Monetary Fund’s spring meeting should cut Japan some slack. Prime Minister Shinzo Abe’s economic policies are in for a drubbing at the shindig in Washington, DC. IMF officials have been bemoaning Japan’s “risky” fiscal stimulus while the U.S. Treasury has been grumbling about the weaker yen. But Japan was right to act.

from Global Investing:

No one-way bet on yen, HSBC says

Will the yen continue to weaken?

Most people think so -- analysts polled by Reuters this month predict that the Japanese currency will fall 18 percent against the dollar this year. That will bring the currency to around 102 per dollar from current levels of 98. And all sorts of trades, from emerging debt to euro zone periphery stocks, are banking on a world of weak yen.

Now here is a contrary view. David Bloom, HSBC's head of global FX strategy, thinks one-way bets on the yen could prove dangerous. Here are some of the points he makes in his note today:

from Breakingviews:

Weaker yen won’t halt Japan Inc’s overseas spree

By Peter Thal Larsen

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

A weaker yen won’t reverse Japan Inc’s overseas M&A drive. While a strong currency, low interest rates and a stagnant home market fuelled an international shopping spree in 2012, the promise of a domestic revival under new Prime Minister Shinzo Abe has caused buyers to temporarily put away their wallets. But even so-called Abenomics can’t cure Japan’s ageing and shrinking population.

from Breakingviews:

Ten ways to tell whether Abenomics is working

By Andy Mukherjee

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Shinzo Abe wants to stem the rot - and quickly. Less than four months into the job, Japan’s new prime minister has launched one of the world’s most ambitious programmes of fiscal and monetary easing. His goal is to defeat the scourge of deflation that has corroded the once-dynamic economy, shrinking it by 9 percent in 15 years. But is Abenomics having its desired effect?

from The Great Debate:

Casting doubt on Japan’s new economic experiment

Almost exactly a decade ago, Ben Bernanke visited Tokyo as a member of the Federal Reserve Board – he was not yet the powerful Fed chairman – and gave some shocking advice to his Japanese counterparts. Surveying the country’s abysmal record of deflation, Bernanke recommended that the Bank of Japan set an explicit inflation target and embark on a massive program of buying government debt to help achieve that goal.

It took a perplexingly long time for the advice to be heeded. Last week, Japan’s new central bank governor, Haruhiko Kuroda, announced that he hoped to achieve 2 percent inflation within two years from the current deflation of -0.70 percent.

from MacroScope:

Yellen-san supportive of BOJ’s aggressive easing

For all the talk about clear communications at the Federal Reserve, central bank Vice Chair Janet Yellen's speech to the Society of American Business and Economics Writers ran a rather long-winded 16 pages.

However, while Fed board members generally do not take questions from reporters, there was a scheduled audience Q&A which, at this particular event, meant it was effectively a press briefing.

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