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Strategies & Market Trends : World Outlook -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (2007)	4/30/2003 12:21:50 PM
From: Les H	Read Replies (2) \| Respond to of 49611

S Korea's tunnel hunters news.bbc.co.uk bleak outlook for Japan news.bbc.co.uk The Nikkei rose 223.43 points or 2.9% to close at the high, 7831.42, following Wall Street but also buoyed by the idea that the government is going to step in, as Koizumi is hinting. Equity traders also like the BoJ policy statement. The BoJ raised its target for shoving cash down the banks’ throats to ¥12-27 trillion, an additional ¥5 trillion. It used the “kitchen sink” approach, naming everything in the world now going wrong, including SARS, as behind the extra “stimulus.” Well, it’s stimulus only if banks start lending, which they have amply demonstrated they don’t know how to do and don’t want to do. The bank may also take some non-government paper as collateral, but this is being downplayed so far. Gov Fukui said the economy shows slight weakening in exports, production and personal consumption. So then the BoJ raised the spring forecast for GDP this fiscal year to 0.8-1.1% from 0.4-1% at the autumn forecast. Oh, dear. In economic news, March industrial production fell 0.2% m/m for the second month, led by a dip in auto exports to the US. METI says that for the fiscal year just ended, the industrial production index rose 2.6% on the year to 93.1, the first gain in 2 years. Manufacturers project a fall of 0.9% in April but rise of 2.1% in May when the new car models and the latest telecom toys come out. March construction orders are down 9.3% y/y, with housing starts down 1.9% y/y. Bank of New York’s analysis of the Feb current account details shows a picture of capital outflow. Net foreign direct investment was down ¥100 billion--i.e., only ¥43 B coming in vs. ¥143 B of the usual Japanese outflow. Net portfolio investment consisted of disinvestment by ¥331 billion plus ¥1.332 trillion in Japanese portfolio investment abroad. Portfolio investment abroad totals ¥16.42 trillion since May 2002--which BoNY notes is “one of the largest bouts of portfolio investment abroad for any 10-month period on record (since January 1985).” Further, Bank of New York’s own data shows “a net outflow of foreign investment from Japanese equities from mid-February through April, while foreign investment in Japanese fixed income has remained persistently negative since October 2002.” It concludes that “Net trade and investment flows are increasingly undermining the JPY and making it easier for the MOF/BOJ to guide USD/JPY higher. Fiscal year-end repatriation of foreign securities was virtually non-existent in 2003 compared to previous years. Current portfolio trends should be monitored closely as both foreign and domestic investors appear to be moving money offshore with bonds yields low and the Nikkei continuing to make fresh 20-year lows.” The bank notes that the bright side is a reduced need for intervention. fxstreet.com