Reuters blog archive

from Breakingviews:

Triple defence will shield Japan from tax burden

By Andy Mukherjee

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

If history is a reliable guide, the Japanese economy will wilt when the country raises its sales tax on April 1. When Japan last increased the levy in 1997, consumer spending collapsed. But the three-pronged defence Prime Minister Shinzo Abe is putting in place makes a repeat doubtful.

Lifting the consumption tax from 5 to 8 percent could remove 6 trillion yen ($58 billion) from the economy, according to Morgan Stanley economist Robert Feldman. That’s equivalent to 1.2 percent of GDP. However, a supplementary budget and corporate tax rebates will return the entire amount to consumers and producers this year. That’s the first line of defence. A government panel is also expected to recommend a permanent reduction in the nation’s 36 percent corporate tax rate.

The second line of defence is sketchier, but the outlines are starting to form. On March 28, Abe identified special zones where regulation on land, labour and product markets will be made friendlier for business. It will be a couple of years before the extent of deregulation is known. In the interim, the prime minister will rely on the stock market, which pooh-poohed his growth strategy last summer, to give him the benefit of the doubt. A revival in slumping Japanese equities is crucial to keeping consumers and companies optimistic.

from Global Investing:

Asia’s path to prosperity and investment opportunities

Investors have been worried about the effect of a Chinese slowdown on Asian emerging markets, but the long-term growth story is still intact, according to specialist investment manager Matthews Asia.

Consumption is one of the key areas of growth. Illustrating the divergence of Asian economies and their path to prosperity, here's an interesting chart from Matthews which shows the standard of living of various Asian countries, expressed by applying Geary-Khamis dollars -- the concept of international dollars based on purchasing power parity -- to today's Japan.

from Breakingviews:

Japan stock market selloff is a temporary setback

By Peter Thal Larsen

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

Japan’s stock market has suffered a temporary setback. The country’s equity indices have dropped more than 10 percent this year in local currency terms. With the central bank on standby for more easing, however, Japanese stocks should benefit from home support.

from MacroScope:

Putin welcomes Crimea in

Vladimir Putin has told Russia’s Duma that he has approved a draft treaty to bring Ukraine’s Crimea region into Russia and in doing so continues to turn a deaf ear to the West’s sanctions-backed plea to come to the negotiating table.

Overnight, Japan added its weight to the sanctions drive, suspending talks with Moscow on an investment pact and relaxation of visa requirements. EU and U.S. measures have targeted a relatively small number of Russians and Ukrainians but presumably there is scope to go considerably further, particularly if Putin decided to move into eastern Ukraine too.

from Anatole Kaletsky:

Japan as the crisis next time

Which major economy is most likely to disappoint expectations this year, and perhaps even cause a financial crisis big enough to break the momentum of global economic recovery? The usual suspects are China and southern Europe. But in my view the most likely culprit will be Japan.

While Japan no longer attracts much attention these days, it is still the world’s third-largest economy, with a gross domestic product equal to France, Italy, Spain, and Portugal combined. Its industries still pose the main competitive challenge to U.S., European and Korean manufacturers, and its regional weight is still sufficient to trigger financial crises across the whole of Asia -- as it did in 1997.

from Breakingviews:

Japan index: Weak demand shows need for stimulus

By Andy Mukherjee

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

The Breakingviews Abenomics Index inched higher in January. But manufacturing stumbled, and the trade deficit zoomed, suggesting anaemic demand both at home and abroad. With wages subdued and sales taxes about to rise, the economy may need a fresh dose of monetary easing.

from Photographers' Blog:

Fukushima’s children

Fukushima Prefecture, Japan

By Toru Hanai

It will soon be the third anniversary of the March 11, 2011 earthquake and tsunami that wrecked the Fukushima Daiichi nuclear power plant.

I myself live in Tokyo, more than a three-hour drive away. Right after the disaster, I too bought bottled water both to drink and to use around the house. Now, however, I drink from the tap without thinking about it.

from Breakingviews:

Japan pension debate goes beyond bonds and stocks

By Andy Mukherjee

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

Japan’s pension reform debate is heating up. But it’s in danger of missing the wood for the trees.

from Breakingviews:

SoftBank’s Alibaba stake both blessing and burden

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

SoftBank’s investment in Alibaba must be one of the most successful of all time. Billionaire chief Masayoshi Son injected just $20 million into the Chinese e-commerce giant in 2000. Today, the 36.7 percent shareholding accounts for a large chunk of Japanese group’s market value. As Alibaba heads toward an initial public offering, however, Son’s investment blessing may become a burden.

from Breakingviews:

Japan bond investors’ overseas trip may flop again

By Andy Mukherjee 

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

Japanese bond investors’ latest overseas trip might flop, just like last summer’s foray. That’s bad news for the investors and for Tokyo’s anti-deflation campaign.