{"id":67361,"date":"2023-09-30T19:34:52","date_gmt":"2023-09-30T23:34:52","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/japan-is-in-no-rush-to-raise-rates-a-weak-yen-is-good-for-stocks\/"},"modified":"2023-09-30T19:34:54","modified_gmt":"2023-09-30T23:34:54","slug":"japan-is-in-no-rush-to-raise-rates-a-weak-yen-is-good-for-stocks","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=67361","title":{"rendered":"Japan Is in No Rush to Raise Rates. A Weak Yen Is Good for Stocks."},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"SB52713745781957624612804590241231078240378\">\n<p>Rumors of monetary tightening by the<br \/>\n        Bank of Japan<br \/>\n       turned out to be exaggerated for now. That\u2019s a good thing for Japanese stocks, up to a point. <\/p>\n<p>Deflationary Japan is seeing unheard-of price rises, with core inflation staying above 3% annually for the past year. BOJ Governor Kazuo Ueda hinted in a press interview three weeks ago that the bank might respond by lifting its -0.1% prime interest rate, sparking a mini-rally in the yen. Then the bank stood pat at a Sept. 21 policy meeting, citing \u201cextremely high uncertainties.\u201d The yen then  tumbled anew toward a record low of 150 to the dollar. <\/p>\n<div class=\"paywall\">\n<p>That\u2019s the level where the BOJ intervened last fall, and the yen, with a big assist from slumping U.S. Treasury yields, climbed 17% in three months. <\/p>\n<p>This time Ueda and colleagues will wait and see whether workers can wring wage hikes from Japan Inc. at negotiations next spring, predicts Masamichi Adachi, the chief Japan economist at UBS. \u201cThey still believe inflation could be temporary,\u201d he says. \u201cThe economy is not overheating yet.\u201d <\/p>\n<p>A sagging currency would be negative for equities in most places. But Japan\u2019s market is dominated by exporters like<br \/>\n        Toyota Motor<br \/>\n       (ticker: 7203.Japan),<br \/>\n        Sony Group<br \/>\n       (6758.Japan), and industrial equipment giant<br \/>\n        Keyence<br \/>\n      (6861.Japan), which have feasted as the declining yen met the stronger-than-expected demand in the U.S. and Europe. The<br \/>\n        iShares MSCI Japan<br \/>\n      exchange-traded fund (EWJ) is up 22% in the past 12 months, outstripping a 16% rise in the S&amp;P 500. <\/p>\n<p>More gains are ahead so long as the U.S. economy keeps chugging along, thinks Daniel Hurley, a portfolio specialist for international equities at<br \/>\n        T. Rowe Price<span>.<\/span><br \/>\n       \u201cHalf the revenue for listed Japanese companies comes from outside Japan,\u201d he says. \u201cIt\u2019s still set up to be a supported market.\u201d<\/p>\n<p>Japan has hit a macroeconomic sweet spot of sorts, adds Aaron Hurd, the senior currency portfolio manager at State Street Global Advisors. Falling prices for most import commodities, oil excepted, take some of the sting out of a record-low yen. Prime Minister Fumio Kishida\u2019s government is preparing to subsidize consumers\u2019 fuel costs, which it can afford to do by borrowing at less than 1% per annum. <\/p>\n<p>A recession in the U.S. would dampen Japanese exports, but likely spur Federal Reserve rate cuts that would bolster the yen. \u201cThe yen could easily be the best-performing currency in the G10 next year, if it goes to 155 to 158 [to the dollar] first,\u201d he says.<\/p>\n<p>Investors are also impressed by Japan\u2019s campaign to make companies more shareholder- and inflation-friendly. The Tokyo Stock Exchange rolled out sanctions earlier this year on companies with market capitalizations that are below their book value. (Toyota itself was in this doghouse before a 50% year-to-date surge.) Kishida is pushing a \u201cnew capitalism\u201d program that would hike the minimum wage by 4% and \u201cmake it easier for people to work in flexible ways.\u201d <\/p>\n<p>\u201cWe actually believe this time is different in Japan,\u201d says Katrina Dudley, a portfolio manager at<br \/>\n        Franklin Templeton<span>.<\/span><br \/>\n       \u201cOur exposure has increased.\u201d <\/p>\n<p>Other market players are, like BOJ Gov. Ueda, waiting for more data before taking any action. \u201cProfessional money managers are now being cautious on Japan,\u201d says Cameron Brandt, the chief of research at financial flows monitor EPFR. \u201cPeople have been burned by false dawns before.\u201d <\/p>\n<p>It\u2019s fair to say that the friendly No. 3 economy is at least nudging in the right direction. With No. 2 China struggling financially and threatening politically, that\u2019s good news. <\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/japan-stock-market-yen-70b1c6e1?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Rumors of monetary tightening by the Bank of Japan turned out to be exaggerated for now. That\u2019s a good thing for Japanese stocks, up to a point. Deflationary Japan is seeing unheard-of price rises, with core inflation staying above 3% annually for the past year. BOJ Governor Kazuo Ueda hinted in a press interview three [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":67362,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-67361","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Japan Is in No Rush to Raise Rates. A Weak Yen Is Good for Stocks. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Rumors of monetary tightening by the Bank of Japan turned out to be exaggerated for now. 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