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from Breakingviews:

Japan index: markets put speed bump in Abe’s path

By Andy  Mukherjee

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

For the first time in six months, Japanese Prime Minister Shinzo Abe’s economic experiment stumbled in May amidst skittish stock and bond markets. But the drop in the Breakingviews Abenomics Index to 93.8, from 94.4 in April, may be temporary as deflation continues to ease.

Run the numbers.

 

from Expert Zone:

Chinese general warns India even as Antony visits Beijing

(Any opinions expressed here are those of the author and not of Thomson Reuters)

India’s Defence Minister A. K. Antony is in Beijing on an official visit and a provocative curtain-raiser was provided by a retired major general of the People’s Liberation Army (PLA) who cautioned India not to “provoke new problems and increase military deployments at the border area and stir up new trouble.”

Predictably, this statement by Major General Luo Yuan, who is associated with the PLA’s Academy of Military Sciences, hit the headlines in both countries. Luo is no stranger to such controversy and has in the past made shrill and hostile remarks to local media and in Chinese cyberspace about Japan, Vietnam and the Philippines. One assertion - since denied - was that China should bomb Tokyo if Japan stepped out of line in relation to the long-standing island dispute between the two East Asian neighbours.

from Breakingviews:

Asia’s pain unevenly spread as China slows

By John Foley

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

Asia’s falling markets reflect the belief that a slowdown in China will take its toll on the region. But things aren’t so straightforward. Look at what proportion of the region’s largest economies goes to China, and how important those exports are to domestic GDP. Despite a decade of rapid growth, the world’s second-largest economy has had a smaller impact on its neighbours than might be expected.

from MacroScope:

G8 — plenty to worry about

The week kicks off with a G8 leaders’ summit in Northern Ireland. Syria will dominate the gathering and the British agenda on tax avoidance is likely to be long on rhetoric, short on binding specifics.

But for the economics file, this meeting could still yield big news. For a start, Japanese prime minister Abe is there – the man who has launched one of the most aggressive stimulus drives in history yet has already seen the yen climb back to the level it held before he started.

from MacroScope:

A week to reckon with

The week kicks off with a G8 leaders’ summit in Northern Ireland. Syria will dominate the gathering and the British agenda on tax avoidance is likely to be long on rhetoric, short on specifics. But for the markets, this meeting could still yield some big news. For a start, Japanese prime minister Abe is there – the man who has launched one of the most aggressive stimulus drives in history yet has already seen the yen climb back to the level it held before he started. Abe will also speak in London and Warsaw during the week.

The financial backdrop could hardly be more volatile with emerging markets selling off dramatically since the Federal Reserve warned the pace of its dollar creation could be slowed. Berlin has said the G8 leaders are likely to discuss the role of central banks and monetary policy, and Angela Merkel will hold bilateral talks with Abe during the summit. President Barack Obama travels to Berlin after the summit for talks with Merkel.

from Breakingviews:

Market jitters could crush Japan’s inflation drive

By Andy Mukherjee

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

Skittish markets are a threat to Japan’s anti-deflation drive. The rising yen, falling stocks and lower government bond yields suggest investors once again view Japan as a safe haven. The Bank of Japan may need to be bolder to prevent their expectations from becoming self-fulfilling.

from Breakingviews:

Deflation flu could leave Asia feeling very sick

By Andy Mukherjee

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

Deflation is entering Asia through the back door. Producer prices are sliding across the region - falling 8.5 percent even in the Philippines, where GDP grew 7.8 percent in the first quarter. Cheaper commodities are partly to blame, but the main culprit is sluggish demand from the United States. If companies can’t make up the difference, they may struggle to repay growing debts.

from Global Investing:

When Japan was an emerging country

Recent wild swings in Japan's financial markets -- stocks, bonds and the yen -- make Japan look almost like an emerging country.

Back in the 19th century, Japan was an emerging country, with its feudal society based largely on farming.

from Breakingviews:

SoftBank’s bump for Sprint isn’t a knock-out

By Peter Thal Larsen

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

SoftBank’s raised bid for Sprint Nextel is no knock-out blow. The Japanese group has tweaked its offer for a controlling stake in the U.S. telco to give the target’s shareholders more value. But Sprint shareholders would retain a stake in a Sprint that has more debt than first envisaged. That erodes SoftBank’s key advantage as it seeks to combat a rival bid from leveraged counterbidder Dish Network.

from Breakingviews:

Bond jitters shouldn’t delay Japan pension reform

By Andy Mukherjee

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

By reforming Japan’s public pension system, Prime Minister Shinzo Abe is taking a calculated risk. Asking state funds to buy fewer government bonds may look like an own goal at a time when the central bank is struggling to control yields. But the payoff to both the government and Japan’s fast-ageing society could be worth it.

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