‘Abenomics’ means less consumption in Japan as an indicator of economic stagnation with no reforms anticipated is a good thing

Does anyone actually think that there will come about in Japan’s corporations, financial institutions and Japan’s central bank any coming structural reforms? I don’t especially knowing how Japan’s corporations are currently managed. This news comes as foreign owners of stock in Japan’s institutions are “bailing out” indicating no confidence in any anticipated reforms touted under “Abenomics.” I’m not a great advocate of consumption, so for me this great news. Who cares if thousands of Honda and Suzuki 50cc Honda crotch rockets are NOT manufactured every year which are with no maintenance or even oil changes, discarded like styrofoam packaging after use at a fast food restaurant?

It just seems astonishing to me that the Central Bank of Japan (BoJ) has such a powerful grip on Japan’s population over the individual Japanese ability to produce and be of value to Japanese society as a whole? The observation here is that Japan has been in a “20 year economic slump” but to whose standards? When I visit anywhere in Tokyo, restaurants are always full, people are going to taverns (izakaya) every night after work, taxis are zooming all around as well as buses, shopping malls are full of shoppers, train stations are packed with Japanese going to and coming back from work, trains are stuffed full of workers at rush hour, the entertainment and sex related industries are booming, markets are full of Japanese grocery shopping everyday, and the tourist industry is shattering records. Economic stagnation? In the neighborhood I live in, there are old houses being torn down and new houses being built constantly. My neighbor just bought a new Toyota car. Who cares if the Japanese aren’t consuming more? Do us all a favor and consume less please.

Source: Reuters

‘Abenomics’ doubts drive foreigners off Japanese stocks, volatility spikes

TOKYO | By Ayai Tomisawa

People are reflected in mirrors as they walk in a busy shopping district in Tokyo, Japan, December 25, 2015. Reuters/Thomas Peter/File Photo

Foreign investors are bailing out of Japanese stocks as a wobbly economy feeds disillusionment about ‘Abenomics’, sparking bouts of volatility in a market increasingly shaken up by policy decisions of the Bank of Japan.

The trouble is that long-term focused foreign funds have turned bearish on doubts that Tokyo can pull Japan out of two decades of economic stagnation, despite more than three years of massive monetary and fiscal stimulus.

“There are many long-term investors who have given up on Japanese stocks as there are no structural reforms being delivered. Meanwhile, monetary policy decisions only have short-term effects,” said Michiro Naito, executive director at equity derivatives at JPMorgan who recently visited Asian investors.

Net selling by foreign investors from January through May was roughly 4.5 trillion yen ($42.07 billion) in Japanese cash equities, according to exchange data, a stark turn from net purchases of about 2.83 trillion yen in the same period last year.

Not surprisingly, the benchmark Nikkei share average .N225 has fallen 13 percent this year, underperforming its global peers. The S&P 500 index .SPX is nearly flat, while the pan-European FTSEurofirst 300 .FTEU3 has fallen 6.8 percent.

All of this has occurred amid a bleak backdrop for Japanese equities, as confidence has been sapped by worries over a sputtering economy, anemic inflation, weak external trade and sluggish consumption.

Moreover, a rebound in the yen has fed concerns about a hit to exporters’ earnings, while anxiety over a possible credit rating downgrade after the government delayed a planned second sales tax hike has led investors to reassess Japanese risk. [nL4N18U1TV] [nL4N18T35N]

It’s a far cry from the optimism stirred by Prime Minister Shinzo Abe’s ascension to power in December 2012, as the Nikkei catapulted to 18-1/2-year highs in June 2015, driven by his Abenomics prescription of monetary stimulus, fiscal expansion and structural reforms. The yen JPY= is also much stronger now, with the dollar fetching 106.81 yen versus 125.85 at its peak in June last year.