25 Mar 2015
Japan: Wages on the rise, and retail outflows look to be following – BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, comments that the rising wages and Japanese equity market performance has led to households increase their appetite for risk, with the Topix Index higher by 13.2% on a year-to-date basis.
Key Quotes
“Rengo – the Japanese Trade Union Confederation – reported last week that wages for the year starting in April were set to rise by 2.4%, the fastest rate of increase since 1998. That is already beginning to show up in the monthly cash earnings data, with contractual cash earnings up 0.9% on an annual basis, the highest since March 2000.”
“This matters from the perspective of the yen. Throughout this period of “Abenomics” there has been little evidence to suggest that Japanese households were seeing Inflation picking up to such a degree to consider investing abroad. But the cross-border flow data is beginning to indicate a change”
“For the first time since “Abenomics” began we can point to some clear evidence that Japanese households have increased their risk appetite. Numerous factors may be coming together to trigger this. The pick-up in wages highlighted above is certainly one factor. The performance of the Japanese equity markets is likely another.”
“ We are all aware of the yen devaluation fuelled surge in equities but on a year-to-date basis, the Topix Index is 13.2% higher in US dollar terms – the best performing major developed equity market. Finally, the wave of central bank easing globally may also have helped Japanese household’s risk appetite, especially for equities.”
“…the surge in retail foreign equity buying is encouraging and does increase the prospect of another bout of yen weakness versus the dollar materialising if current conditions are sustained.”
Key Quotes
“Rengo – the Japanese Trade Union Confederation – reported last week that wages for the year starting in April were set to rise by 2.4%, the fastest rate of increase since 1998. That is already beginning to show up in the monthly cash earnings data, with contractual cash earnings up 0.9% on an annual basis, the highest since March 2000.”
“This matters from the perspective of the yen. Throughout this period of “Abenomics” there has been little evidence to suggest that Japanese households were seeing Inflation picking up to such a degree to consider investing abroad. But the cross-border flow data is beginning to indicate a change”
“For the first time since “Abenomics” began we can point to some clear evidence that Japanese households have increased their risk appetite. Numerous factors may be coming together to trigger this. The pick-up in wages highlighted above is certainly one factor. The performance of the Japanese equity markets is likely another.”
“ We are all aware of the yen devaluation fuelled surge in equities but on a year-to-date basis, the Topix Index is 13.2% higher in US dollar terms – the best performing major developed equity market. Finally, the wave of central bank easing globally may also have helped Japanese household’s risk appetite, especially for equities.”
“…the surge in retail foreign equity buying is encouraging and does increase the prospect of another bout of yen weakness versus the dollar materialising if current conditions are sustained.”