NIPPON FALCONS LEAGUE

Our blog's intention is to request the US government to grant us a chance to defend our mother country Japan at the American court of law regarding the resolution "Comfort Women" passed July 30, 07.

東南アジアが発展し、日中貿易は後退し、韓国は泣く

Japan’s Stimulus Seen Boosting Southeast Asia as Korea Suffers

By Karl Lester M. Yap - Jan 20, 2013 10:00 AM CT

Japan’s drive to revive growth may boost Southeast Asian nations as rising demand in the world’s No. 3 economy spurs orders and Japanese companies take advantage of cheap funding to invest in the region.

Indonesia, Thailand and Malaysia are identified by HSBC Holdings Plc and Credit Suisse Group AG to be among the biggest beneficiaries of Japanese monetary easing and a 10.3 trillion yen ($115 billion) stimulus plan by Prime Minister Shinzo Abe, who wrapped up a tour of Southeast Asia on Jan. 18. In contrast, South Korea may suffer as a weakening yen makes its rival’s automotive and electronics exports more competitive, say Credit Suisse and Australia & New Zealand Banking Group Ltd.

The wave of cheap funds “will drive Japanese companies and banks to raise investments and expand in Southeast Asia,” Frederic Neumann, co-head of Asian economics research at HSBC in Hong Kong, said in an interview. “This will spur asset prices, investment, consumption and could single handedly help these economies sustain high levels of growth in 2013.”

Abe is exerting pressure on the central bank to bolster an economy that has had three recessions in five years as he seeks to rejuvenate a nation whose investments helped spur Southeast Asia’s boom in the early 1990s. Lower borrowing costs at home may add momentum to plans by Japanese companies to expand overseas, with Toyota Motor Corp. announcing in November it will increase production in Indonesia.

The nation’s seventh prime minister in six years has called for “bold monetary policy” to defeat deflation and drive the yen lower. The Bank of Japan, which starts a two-day policy meeting today, will adopt the 2 percent inflation target advocated by Abe, doubling its current 1 percent goal, according to people familiar with central bank officials’ discussions.

’Compelling Investment’

The prospect of additional policy easing has helped send the yen down about 10 percent versus the dollar and push the Asia excluding Japan stocks gauge up 11 percent in the two months ended Jan. 18. It has also lifted prospects for Asian emerging-market bonds and currencies as investors seek higher returns.

“Not only is the U.S. implementing more quantitative easing, but Japan has joined the party,” said Jason Mortimer, a rates and options strategist at JPMorgan Chase & Co. in Hong Kong. “You’re going to have even more pressure on currencies to appreciate especially in emerging-market Asia where currencies are undervalued. This is a very compelling investment opportunity.”

Winners, Losers

Commodity exporters such as Indonesia and Malaysia are best positioned to benefit from stronger domestic demand in Japan, according to a Jan. 16 Credit Suisse report that analyzed each Asian economy’s exports to the country, excluding industrial supplies and machinery parts that are less likely to be destined for consumer demand.

“The winners would be countries which have Japan as both their ‘suppliers’ and ‘consumers’ while the losers would be those whose exports are similar to and compete with those from Japan,” Santitarn Sathirathai, a Singapore-based economist at Credit Suisse, wrote in the report.

A recovery in Japan would provide a further boost to a region where government spending and rising investment have helped support growth. The Asian Development Bank in December lifted forecasts for Southeast Asian expansion even as the global outlook faltered, after policy makers took steps to bolster their economies, with Malaysian Prime Minister Najib Razak increasing outlays and Philippine President Benigno Aquino speeding up infrastructure projects.

Importers Gain

Japan’s stimulus and a weaker currency may also bring risks. ANZ said a declining yen will hurt overseas suppliers as shipments become more expensive. Net exporters including Malaysia, the Philippines and Indonesia may suffer while net importers of Japanese goods such as Hong Kong, Thailand and Taiwan will probably gain, Eugenia Victorino, a Singapore-based economist at ANZ, wrote in a Jan. 10 report.

South Korea is most vulnerable to the currency effect, according to Credit Suisse, while Daiwa Capital Markets estimates the country’s technology companies, shipbuilders and automakers including Kia Motors Corp. (000270) may be among the biggest losers.

Gains in the won prompted South Korea’s central bank to announce in November it would tighten limits on currency forward positions at banks. The Bank of Korea this month lowered its growth forecast for 2013, highlighting obstacles to a rebound that include currency appreciation.

Japan’s dispute with China over the sovereignty of islands in the East China Sea has also helped shift Abe’s focus toward Southeast Asia and prompted companies to add investments elsewhere in the region.

Strengthen Ties

The prime minister, who took office last month, visited Vietnam, Thailand and Indonesia last week to strengthen bonds with countries in the region, some of which are also involved in territorial disputes with China.

Nissan Motor Co. (7201), Japan’s second-largest automaker, pledged in November to invest 11 billion baht ($370 million) in a second Thai factory. Toyota said the same month it will more than double vehicle production capacity and build a new engine factory in Indonesia.

Japan’s trade ties with Southeast Asia are growing as the dispute with China hurts sales to the mainland.

In the first 11 months of last year, shipments to the 10 members of the Association of Southeast Asian Nations, Japan’s third-largest export destination, accounted for 16.2 percent of all overseas sales, a rise of 1.3 percentage points from the full-year 2011, Japanese customs data show. The share of exports to China, Japan’s biggest market, fell to 18.1 percent from 19.7 percent over the same period.

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
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Author:伊勢平次郎
Author: Nobuyoshi Ozaki

A long forty six years have passed since I stepped on to American soil. I have had various odd jobs in the past until I recently retired. Examples include working with Steven Spielberg as assistant director in a film called "1941." I was supervisor and later became Public Relation representative for Toyota Group - USA. My last occupation was a Senior Research analyst working in Silicone Valley for a major news paper from Tokyo, Japan. My spouse, Christine is a flight attendant, traveling often to the Middle East and Africa. We have spent three quarters of our life together as world adventurers. This photo was taken in Argentina. We now live in swampy Louisiana.

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