The new prime minister, Shinzo Abe, has the chance to reshape the Bank of Japan next year, in what is regarded as one of the vital monetary policy events of 2013. Toru Fujioka reports
Shinzo Abe, the incoming Japanese prime minister, backed the central bank when it raised interest rates in 2006, a move he now says was a mistake. His shift may signal less tolerance for deflation in the third-largest economy.
Mr Abe, whose party swept to victory in elections for the lower house of Parliament, will have the chance to reshape the Bank of Japan (BOJ) next year, when the terms of its governor and two deputies expire. Mr Abe said he told the central bank governor Masaaki Shirakawa on Tuesday that he wants an accord with a 2 per cent inflation target. The BOJ was forecast to boost its asset purchases as soon as yesterday.
"This is one of the most important monetary policy events for 2013," said Bruce Kasman, the New-York based chief economist at JPMorgan Chase & Co. "It could potentially be similar to the major change in US monetary policy after the appointment of Paul Volcker."
American policymakers by the late 1970s recognised the broader costs of inflation to competitiveness and productivity, and backed the efforts of Mr Volcker, the then-Federal Reserve chairman, to contain it. Any similar shift by Japan with respect to ending deflation would diminish incentives to save and make it more attractive to borrow, a potential recipe for faster growth.
Mr Shirakawa told reporters that he hadn't discussed monetary policy at his meeting with Mr Abe. The new prime minister said he told the central bank chief that he had campaigned on ending deflation and correcting a strong yen.
The yen weakened 0.2 per cent to 84.01 per dollar in Tokyo on Tuesday after touching a 20-month low on the likelihood of more easing. The Nikkei 225 Stock Average closed up 1 per cent, heading for its sixth week of gains, while remaining about 75 per cent below a 1989 peak during an investment bubble.
Mr Kasman's colleague Masamichi Adachi in Tokyo said last week that the BOJ may this week adopt a "new style of open-ended asset purchases".
JPMorgan last week boosted its estimate for Japan's growth in 2013 to 0.4 per cent from zero, accounting for fiscal stimulus pledged by Mr Abe. Seventeen of 21 analysts surveyed by Bloomberg expect the BOJ to ease at a meeting this week.
While Japan's entrenched deflation helps retirees preserve wealth, younger generations are hit by falling wages and diminished incentives for borrowing crimp growth. Unemployment among those aged 15-24 was 7.5 per cent in October, compared with an unadjusted overall rate of 4.1 per cent.
The yen is still stronger than the 100 yen per dollar that the Nissan chief executive Carlos Ghosn said is the currency's "neutral range".
In the US, "people began to recognise inflation's broader cost and we saw a shift away from viewing it as acceptable," said Mr Kasman. "I don't think we've really seen an aggressive and committed effort to get Japan out of deflation. Political pressures are shifting in a way that may produce that fight."
Austerity measures in Europe and a territorial spat with China are dragging down Japan's exports, with the nation's economy shrinking in each of the past two quarters, meeting the textbook definition of a recession. Big manufacturers are the most pessimistic in almost three years. An ageing population and the world's biggest public debt make it harder to drive a sustained recovery.
"We have to get the economy out of deflation, correct the strong yen, create jobs and boost growth," Mr Abe said at a press conference. "That's our mission."
Mr Abe made increased cooperation between the government and the central bank a centrepiece of his campaign, saying last month that the BOJ "made a mistake" in stopping quantitative easing amid signs of economic recovery in 2006.
The BOJ ended its five-year policy of flooding the lending market with cash in March 2006, when Mr Abe was the chief cabinet secretary. Four months later, just before he became prime minister, the central bank raised its key lending rate for the first time in almost six years. By the third quarter of 2007, the economy was contracting and his popularity had slumped. He resigned, citing illness.
"The most important lesson Abe must have learnt was that the economy matters for his popularity," said Masayuki Kichikawa, the Tokyo-based chief economist at Bank of America Merrill Lynch. "Pushing the central bank may be the easiest solution for now due to the debt burden and because deregulation takes too long to realise."
Since Mr Abe resigned in September 2007, the Nikkei has fallen by around half as the yen has gained around 40 per cent against the dollar, while public debt has grown by a fifth to more than twice the size of the economy.
"There is a limit to what monetary policy can do," said Hiroshi Miyazaki, the chief economist at Shinkin Asset Management in Tokyo. "The government must try harder to help companies. Expectations on monetary policy are building up in the market but Japan's economy needs the government to address lowering growth expectations in a rapidly-ageing society."
The two-thirds majority won this week by a Liberal Democratic Party-led coalition in the lower house enables it to override most decisions by the opposition-controlled upper house. The upper chamber will have a say on Mr Abe's picks to replace Mr Shirakawa and his deputies because votes on nominations can't be overridden.
For now, two former private-sector economists on the BOJ's nine-member board show signs of favouring more aggressive stimulus, giving Mr Abe the chance to push for a pro-easing majority.
"This is going to be Abe's revenge," said Kazuhiko Ogata, the chief economist at Crédit Agricole. "He has rock-solid determination to push the BOJ for more stimulus."
* Bloomberg News
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5
Specs
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Andor
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Specs
Engine: 2-litre
Transmission: Eight-speed automatic
Power: 255hp
Torque: 273Nm
Price: Dh240,000
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Last 10 NBA champions
2017: Golden State bt Cleveland 4-1
2016: Cleveland bt Golden State 4-3
2015: Golden State bt Cleveland 4-2
2014: San Antonio bt Miami 4-1
2013: Miami bt San Antonio 4-3
2012: Miami bt Oklahoma City 4-1
2011: Dallas bt Miami 4-2
2010: Los Angeles Lakers bt Boston 4-3
2009: Los Angeles Lakers bt Orlando 4-1
2008: Boston bt Los Angeles Lakers 4-2
COMPANY%20PROFILE%20
%3Cp%3EName%3A%20DarDoc%3Cbr%3EBased%3A%20Abu%20Dhabi%3Cbr%3EFounders%3A%20Samer%20Masri%2C%20Keswin%20Suresh%3Cbr%3ESector%3A%20HealthTech%3Cbr%3ETotal%20funding%3A%20%24800%2C000%3Cbr%3EInvestors%3A%20Flat6Labs%2C%20angel%20investors%20%2B%20Incubated%20by%20Hub71%2C%20Abu%20Dhabi's%20Department%20of%20Health%3Cbr%3ENumber%20of%20employees%3A%2010%3C%2Fp%3E%0A
What is Bitcoin?
Bitcoin is the most popular virtual currency in the world. It was created in 2009 as a new way of paying for things that would not be subject to central banks that are capable of devaluing currency. A Bitcoin itself is essentially a line of computer code. It's signed digitally when it goes from one owner to another. There are sustainability concerns around the cryptocurrency, which stem from the process of "mining" that is central to its existence.
The "miners" use computers to make complex calculations that verify transactions in Bitcoin. This uses a tremendous amount of energy via computers and server farms all over the world, which has given rise to concerns about the amount of fossil fuel-dependent electricity used to power the computers.
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
PAKISTAN SQUAD
Abid Ali, Fakhar Zaman, Imam-ul-Haq, Shan Masood, Azhar Ali (test captain), Babar Azam (T20 captain), Asad Shafiq, Fawad Alam, Haider Ali, Iftikhar Ahmad, Khushdil Shah, Mohammad Hafeez, Shoaib Malik, Mohammad Rizwan (wicketkeeper), Sarfaraz Ahmed (wicketkeeper), Faheem Ashraf, Haris Rauf, Imran Khan, Mohammad Abbas, Mohammad Hasnain, Naseem Shah, Shaheen Afridi, Sohail Khan, Usman Shinwari, Wahab Riaz, Imad Wasim, Kashif Bhatti, Shadab Khan and Yasir Shah.
The specs
Engine: 2.9-litre twin-turbo V6
Power: 540hp at 6,500rpm
Torque: 600Nm at 2,500rpm
Transmission: Eight-speed auto
Kerb weight: 1580kg
Price: From Dh750k
On sale: via special order
MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid
SPECS
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The drill
Recharge as needed, says Mat Dryden: “We try to make it a rule that every two to three months, even if it’s for four days, we get away, get some time together, recharge, refresh.” The couple take an hour a day to check into their businesses and that’s it.
Stick to the schedule, says Mike Addo: “We have an entire wall known as ‘The Lab,’ covered with colour-coded Post-it notes dedicated to our joint weekly planner, content board, marketing strategy, trends, ideas and upcoming meetings.”
Be a team, suggests Addo: “When training together, you have to trust in each other’s abilities. Otherwise working out together very quickly becomes one person training the other.”
Pull your weight, says Thuymi Do: “To do what we do, there definitely can be no lazy member of the team.”
The%20specs
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De De Pyaar De
Produced: Luv Films, YRF Films
Directed: Akiv Ali
Cast: Ajay Devgn, Tabu, Rakul Preet Singh, Jimmy Sheirgill, Jaaved Jaffrey
Rating: 3.5/5 stars
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
more from Janine di Giovanni
Defined benefit and defined contribution schemes explained
Defined Benefit Plan (DB)
A defined benefit plan is where the benefit is defined by a formula, typically length of service to and salary at date of leaving.
Defined Contribution Plan (DC)
A defined contribution plan is where the benefit depends on the amount of money put into the plan for an employee, and how much investment return is earned on those contributions.
Mohammed bin Zayed Majlis
MATCH INFO
Euro 2020 qualifier
Norway v Spain, Saturday, 10.45pm, UAE
Sholto Byrnes on Myanmar politics
Mountain%20Boy
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The%C2%A0specs%20
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The%20new%20Turing%20Test
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'Brazen'
Director: Monika Mitchell
Starring: Alyssa Milano, Sam Page, Colleen Wheeler
Rating: 3/5
THE SPECS
Touareg Highline
Engine: 3.0-litre, V6
Transmission: 8-speed automatic
Power: 340hp
Torque: 450Nm
Price: Dh239,312
UAE currency: the story behind the money in your pockets
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
