SINGAPORE Eric Dickerson Youth Jersey , Nov. 11 (Xinhua) -- While the unexpected announcement of aggressive monetary easing policy by Japan late last month has caused the yen to depreciate against other major currencies, the impact upon the rest of Asia will be mixed rather than solely negative.
Since April last year, the Bank of Japan has been aggressively easing monetary policy by buying Japanese government bonds and other assets. At the close of last month, it surprised financial markets by stepping up its monetary easing program. It will now buy around 80 trillion yen of assets a year, compared to 60 to 70 trillion yen previously.
The increase is significant in global terms, as it equates to monthly asset purchases of around 60 billion U.S. dollars.
In addition Jamon Brown Youth Jersey , the Japanese government pension investment fund ( GPIF) announced its new medium-term asset allocation target by increasing the shares allocated to riskier assets such as domestic stocks to 25 percent from 12 percent, foreign stocks to 25 percent from 12 percent, and foreign bonds to 15 percent from 11 percent, while reducing its allocation to Japanese government bonds.
Japan's aggressive move, which aimed to tackle its weak growth and slowing inflation, was immediately seen negatively impacting other Asian export nations such as South Korea.
According to BNP Paribas' estimates Josh Reynolds Youth Jersey , South Korea seems closer to Japan compared to other Asian countries in terms of its similarities with Japan's export basket. Of the total of all Japanese exports, 85 percent are concentrated in five product categories chemicals, manufactured goods, heavy machinery, electrical machines and transport equipment. South Korea has 78 percent of exports in those same categories.
The greatest concern is that accelerated yen depreciation could lead to "competitive devaluation" of currencies of South Korea, which could influence its financial markets. If the South Korean government and central bank attempt to depreciate their currency Gerald Everett Youth Jersey , it could hurt domestic equities, which have always been positively correlated with the currency.
On the other hand, the impact on Southeast Asia of the depreciating yen should be relatively lower than the impact on North Asia. While some Southeast Asian countries may also face upward pressure on their currencies as a result of the yen weakness, cheaper Japanese imports of capital goods and railway equipment could mean increased infrastructure investment in their economies.
Furthermore, Southeast Asia will likely enjoy GPIF inflow into their equity markets. The Bank of America-Merrill Lynch Research estimated emerging Asia could see inflows of 29 billion U.S. dollars from the GPIF and other public pension funds.
As the U.S. has recently ended its bond purchasing program, Japan's monetary easing should go a long way in offsetting a gradual climb in U.S. interest rates Rob Havenstein Youth Jersey , giving Southeast Asian economies a window during which funding will remain affordable.
But this fund flow from Japan could also be a double-edged sword. As HSBC Global Research pointed out, the dilemma that emerging Asia faces is that easy cash reduces the urgency for reform. To protect itself against future crises only leading to greater pain, emerging Asia must press ahead with structural reforms, shifting its growth from an excessive reliance on debt, to advances in productivity. Such reforms take time, and are never usually politically palatable.
So HSBC has this advice for this region: "The Bank of Japan just delivered a bit more time. Better use it wisely."
TOKYO Tyler Higbee Youth Jersey , Nov. 17 (Xinhua) -- The Nikkei stock index tumbled 2.96 percent Monday as investors scrambled to lock in recent gains following the unexpected contraction in Japan's gross domestic product for the July-September quarter.
The Nikkei 225 index lost 517.03 points to close at 16,973.80, whereas the broader Topix index of all first-section issues fell 34.28 points, or 2.45 percent, to finish at 1,366.13.
The Cabinet Office announced just before the markets opened Monday morning that the nation's economy shrank an annualized 1.6 percent in the three months through September Jared Goff Youth Jersey , in stark contrast to median economists' expectations for the economy to grow 2.2 percent.
The latest GDP data for Q3 follows a revised 7.3 percent contraction in the previous quarter, meaning that Japan has now officially entered a technical recession.
Local traders said that selling will now likely increase as the yen's retreat on the back of the Bank of Japan's additional easing last month and the government pension fund's commitment to channel more funds into shares, will now be countered by uncertainty in global markets, pending Prime Minister Shinzo Abe's decision on whether or not to delay a second unpopular sales tax hike and call a snap-election to achieve this.
Masayuki Doshida, a senior market analyst at Rakuten Securities, said that Samson Ebukam Youth Jersey , "Until last week the market has been going up strongly. But now selling will increase, given the bad state of the economy. "
Other analysts said that while the market had already factored in the likelihood of slow growth figures, owing to the continued downside pressures of the initial tax hike from 5 to 8 percent in April, a contraction for a second successive quarter was totally unexpected, and hence stocks came under heavy selling pressure as the market was spooked.
Hiroichi Nishi, assistant general manager of equity research at SMBC Nikko Securities Inc. said that investors are now concerned about the future health of Japan's economy John Johnson Youth Jersey , calling the GDP results a "negative surprise" and stating that market players did not expect a contraction.
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