January 2012
- The Topix is flat over December.
- Japan’s third-quarter GDP is revised down.
- The Bank of Japan leaves policy unchanged.
Japanese equity markets were flat over the December with the Topix finishing the month only very slightly higher. The index declined considerably over 2011, losing 18.9% in yen terms.
A rise in the Baltic Dry Index (which measures changes to the cost of transporting raw materials) gave a boost to Japanese shipping companies in early December. More positive news for the sector followed when Mitsui OSK Lines announced plans to create a joint supertanker service with companies in Denmark and Singapore. There was less positive news from Toyota, however. The carmaker sharply reduced its earnings forecast for the current fiscal year, blaming the strong yen and recent flooding in Thailand.
Economic news in early December disappointed. Machinery orders declined for the second month in a row in October. Some commentators speculated that the drop is a sign that Japanese exporters are struggling to cope with the strength of the yen in the current tough economic environment. More evidence that the surging currency is weighing on Japan’s fragile post-earthquake recovery came in the form of a downwards revision to third-quarter growth figures. The Cabinet Office said that the Japanese economy expanded at an annualised rate of 5.6% between July and September, more slowly than the previously predicted rate of 6.0%. Meanwhile, the Bank of Japan lowered its growth projections for the current financial year to 0.4% from an earlier 0.6%. It also left interest rates unchanged and made no changes to its monetary stimulus programme.
