Japanese business confidence improves (AP)

By TOMOKO A. HOSAKA, Associated Press Tomoko A. Hosaka, Associated Press – Mon Oct 3, 12:50 am ET

TOKYO – A key central bank survey offered a cautiously optimistic assessment of corporate Japan, where business confidence is improving even as the global economy's prospects darken.

In the Bank of Japan's quarterly "tankan" survey of business sentiment released Monday, the main index for big manufacturers climbed back into positive territory as a recovery from the March 11 earthquake and tsunami took hold. The latest reading stood at 2, up from minus 9 three months ago.

The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.

The earthquake and tsunami disrupted parts manufacturing, leading to critical shortages for industries such as automobiles and electronics. The fallout extended worldwide, with the International Monetary Fund estimating that global car production tumbled up to 30 percent in the two months after the disaster.

The economic aftershocks dragged Japan back into recession and resulted in a sharp deterioration in confidence that sent the main tankan index to its lowest level in more than a year.

But factories have put supply disruptions largely behind them now. Industrial production figures last week showed that output had nearly recovered to pre-quake levels. Exports in August rose for the first time in six months.

Monday's numbers "clearly support our view that Japan's economy continues to recover, largely due to the improvement of auto sector, even with intensified headwinds from slower global growth and yen appreciation," said Masamichi Adachi, senior economist at JPMorgan Securities Japan, in a research note.

The mood among big non-manufacturers also climbed into positive territory to 1 from minus 5 in June.

Smaller enterprises improved as well, though they weren't feeling quite as optimistic. The confidence index for medium-sized manufacturers rose to minus 3 from minus 12. The small manufacturers' index stood at minus 11 from minus 21.

The future appears less certain. Companies in the tankan gave a mixed picture of the months ahead, reflecting deepening worries about global growth, Europe's debt problems and a persistently strong yen.

The IMF last month sharply downgraded its economic outlook for the United States and Europe through the end of next year. Its chief economist described the world economy as entering a "dangerous new phase."

What happens elsewhere matters to Japan because it relies heavily on exports to drive growth. Any slowdown in overseas demand could thwart progress made since the disaster.

Exporters are also grappling with a strong yen, which surged this year to post World-War II highs against the dollar as the U.S. central bank pursued stimulus policies that contributed to a weaker greenback. When the yen climbs, it reduces the value of exporters' overseas profits when repatriated to Japan.

Officials have expressed concern that the yen's prolonged strength could lead to a hollowing out of Japanese industry. Already, companies such as Nissan Motor Co. and Panasonic Corp. have announced plans to shift more production overseas.

The survey forecasts business sentiment among large manufacturers to rise to 4 over the next quarter. Medium-sized manufacturers also expect a slight improvement. But small manufacturers and non-manufacturers predict business conditions to either stay flat or deteriorate.

The tankan, which helps guide monetary policy, showed that large companies overall plan to boost capital spending by 3 percent this fiscal year through March 2012. The figure is down from 4.2 percent in the June survey.

Large manufacturing companies assume an average exchange rate of 81.15 yen per dollar for this fiscal year compared with current rate of around 77 yen. The discrepancy could mean firms will have to revise down revenue and profits forecasts later in the year.

The Bank of Japan surveyed 10,910 companies nationwide. About 99 percent responded.

The bank's next policy board meeting is scheduled for Thursday and Friday.

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Japanese business confidence improves

Japanese business confidence improves A key central bank survey offered a cautiously optimistic assessment of corporate Japan, where business confidence is improving even as the global economy's prospects darken. In the Bank of Japan's quarterly "tankan" survey of business sentiment released Monday, the main index for big manufacturers climbed back into positive territory as a recovery from the March 11 earthquake and tsunami took hold. The latest reading stood at 2, up from minus 9 three months ago. The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.
4 Oct It's a familiar nighttime routine: You are out in Shimbashi, drunk, and the last train has passed. What to do? While pondering the predicament a young Chinese gal materializes on a nearby corner. "Excuse me, sir?" Thus begins a survey of quickie sex services from weekly tabloid Shukan Asahi Geino (Sept. 15), which finds that prices are plummeting in the current deflationary environment. "We can get you a room for 5,000 yen," she continues. "Ah, but I've only got 3,000 yen," the crafty writer counters. In Tokyo's entertainment areas, below-the-belt services for 5,000 yen are in abundance, but many lucky lads are getting away with much less. (Tokyo Reporter)
4 Oct The Asahi beer is ice-cold. Naoki Doi takes sips from it between bites of curry. The bespectacled tour guide has asked me and my family to eat fast: he's taking us around some of Kyoto's outstanding shrines and temples, and there's a lot of them to see. He is, he says, relieved to have some business again. In March this year, a magnitude 9.0 earthquake struck off the coast of East Japan, sending a devastating tsunami towards the shore. The tsunami wiped out entire towns across the country's Pacific coast, and caused a meltdown at the Fukushima Daichi nuclear plant. But while Japan has rebuilt large parts of the damaged areas, tourism in the country took a huge hit. Kyoto may be 500 miles south of Fukushima Prefecture, but it still felt the impact. (guardian.co.uk)
4 Oct More and more riders of fixed-gear bikes--racing bicycles without brakes--are being ticketed by police for riding on public roads. Riding a bicycle without brakes on a public road is a violation of the Road Traffic Law. The number of cases in which police have taken action against such bicycles--known as "fixies" in the West and "piste bikes" in Japan--has also increased. "Piste" is a French word meaning race track. Piste bikes have fixed gears directly linking the rotation of pedals to the rear wheel and are primarily used for track racing. (Yomiuri)
3 Oct Increasing numbers of Japanese are falling victim to scams in Shanghai, being lured into paying exorbitant charges for minimal services, according to Japanese consular officials. This year alone there have been 70 Japanese who have fallen to Shanghai scams, costing them close on 10 million yen (around $130,000). Most of the victims have been men, but some women have also fallen into the trap. Japanese consulate officials said the majority of scams are being pulled off in restaurants, clubs and bars in popular tourist areas along the Bund. (majirox news)
3 Oct The town of Futaba is either a place without people or a group of people without a place. Japan's nuclear disaster contaminated the town's 20 square miles, leaving the land uninhabitable, perhaps for decades. The disaster also forced the evacuation of 7,000 people from the town, with many of them still living at an abandoned high school more than 100 miles from home. For months, those people waited to hear about their chances of returning home. But now that a return to Futaba - on the doorstep of the Fukushima Daiichi nuclear plant - seems almost inconceivable, town officials have recently composed a new plan: They'd like to rebuild Futaba somewhere else. "What we are trying to do is unprecedented," said Oosumi Muneshige, a chief assistant to the mayor. "We're looking for a place where everybody can live together, basically a reconstruction of what we had before." (Seattle Times)

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Japan PM resigning amid sinking public confidence (AP)

TOKYO – Japanese Prime Minister Naoto Kan announced Friday he would resign after almost 15 months in office amid plunging approval ratings over his government's handling of the tsunami disaster and nuclear crisis.

In a nationally televised speech, Kan said he was stepping down as chief of the ruling Democratic Party of Japan and would officially quit as prime minister after the ruling party votes Monday to pick a new leader — the country's sixth prime minister in five years.

Japan has been plagued by high turnover in political leadership at a time when the country faces huge problems, including an aging population, bulging debt and stagnant economy — and now reconstruction from the worst disaster to hit the country since World War II.

Former Foreign Minister Seiji Maehara, a 49-year-old expert in defense and a China hawk, is viewed as the front-runner to replace Kan. Finance Minister Yoshihiko Noda and Trade Minister Banri Kaieda are also viewed as contenders.

The decision was widely expected because in June, Kan had promised to quit once lawmakers passed three key pieces of legislation, the final two of which cleared the parliament earlier Friday. Kan managed to survive only a few months longer than the four previous prime ministers, who each lasted a year or less.

Looking back on his year and three months in office, Kan said he did all he could given difficulties he faced, including the disasters and a major election defeat in upper house elections last summer that left the parliament in gridlock.

"Under the severe circumstances, I feel I've done everything that I had to do," he said. "Now I would like to see you choose someone respectable as a new prime minister."

The 64-year-old Kan has seen his approval ratings tumble below 20 percent amid a perceived lack of leadership after the March 11 earthquake and tsunami, which led to meltdowns at three reactors at the Fukushima Dai-ichi nuclear power plant.

Only 10 percent of respondents approved of Kan's job performance, while 69 percent disapproved, in an AP-GfK poll conducted between July 29 and Aug. 10. Some 21 percent said they neither approved or disappoved. The poll's margin of error was 3.8 percent.

Survivors have complained about slow recovery efforts, and radiation has spread into the air, water and some foods. Radiation leaking from the plant has declined dramatically as workers try to bring the plant to a cold shutdown by January.

Many of the 100,000 people who were evacuated from around the plant live in temporary housing or shelter, and have no idea when they will be able to return to their homes. Accumulated radiation in some locations may keep them away for a long time, government officials have said recently.

Kan was at least partly undone by persistent political infighting, including within his own party. While the public hungered for political cooperation and vision in the wake of the crisis, parliamentary sessions frequently descended into squabbling matches that have disillusioned with public.

It was a no-confidence motion in June submitted by an opposition bloc that prompted Kan in June to promise he would resign in a desperate attempt to keep his own party members from joining the vote.

In the wake of the crisis, Kan urged Japan to become less reliant on nuclear energy, but his appeal did little to boost his image.

At an evening press conference, Kan said that the atomic crisis made him realize that having so many nuclear power plants in quake-prone Japan "could endanger the people's future."

Contenders will officially declare their candidacy on Saturday, followed by a debate on Sunday and party vote Monday. The new Cabinet is expected to be installed Tuesday.

Kan urged the Democrats to seek unity as they pick a new leader. A key player in the process remains party kingpin Ichiro Ozawa, who still wields enormous influence even though he lost to Kan in the party leadership election last September.

"I hope to see this party become one, where everyone from the young to the veterans can discuss policy actively and freely, then cooperate and act as one," Kan said.

Kan, who called off a planned trip to visit President Barack Obama next month due to the political uncertainty, said Tokyo should keep Japan-U.S. alliance as "cornerstone" of its security and foreign policy.

He also urged his successor to "not put off any longer" attempts to rein in Japan's public debt, which has grown to more than twice the size of the country's gross domestic product. The idea of raising the country's 5 percent sales tax as a way to address this problem and raise money for reconstruction efforts seems to have lost traction.

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Japan Says G-7 Eyeing Market Turmoil as China Urges Rebuilding Confidence - Bloomberg

Japanese Finance Minister Yoshihiko Noda. Photographer: Haruyoshi Yamaguchi/Bloomberg

Aug. 19 (Bloomberg) -- K.C. Chan, Hong Kong's secretary for financial services and treasury, talks about the measures to boost cross-border investments between the city and mainland China. China will start an exchange-traded fund linked to Hong Kong stocks and expand sales of yuan bonds in the city, Li Keqiang, the front-runner to replace Wen Jiabao as China’s premier in 2013, said at an Aug. 17 economic forum in Hong Kong. Chan also discusses Hong Kong's economy and global financial markets. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Japan called on Group of Seven nations to work closely to counter market turmoil and Asian officials sought to calm investors as stocks slumped on concern the U.S. recovery is faltering.

The G-7 needs “very close cooperation in coming weeks,” Japanese Finance Minister Yoshihiko Noda said in Tokyo, where the Topix index fell to a two-year low. Hong Kong financial official K.C. Chan urged investors to “stay calm” and not be “spooked by the market,” as the Hang Seng Index slumped 3.1 percent. In Beijing, Vice President Xi Jinping said his nation will avoid an economic hard landing.

Plunging equity markets are crushing consumer and business confidence, worsening the outlook for a global economy already hampered by the debt burdens of developed nations. Speculation that European banks may have insufficient capital and signs of weakness in the U.S. economy are helping to drive a stock rout that returned to Asia today.

“Business confidence is tailing off and global growth slowing, and Europe’s debt situation appears to be getting worse and worse without any coordinated policy response,” said Matt Riordan, who helps manage almost $6.6 billion in Sydney at Paradice Investment Management Pty. “The worst case is that you go back to a 2008-type financial crisis.”

In South Korea, the financial regulator urged insurers to boost capital in preparation for a potential crisis, and the benchmark Kospi index (KOSPI) plunged 6.2 percent, the most since 2008. South Korea’s exchange earlier said it temporarily halted program trading of shares on the Kospi after futures tumbled.

Asked how policy makers should respond to market turmoil, Noda referred reporters to an Aug. 8 pledge by G-7 finance ministers and central bank governors to “take all necessary measures to support financial stability and growth.” He didn’t specify any likely next step.

A past example of joint action is the intervention that temporarily weakened Japan’s currency after the nation’s March earthquake. Developed nations are hampered in stimulating their economies because of their debt burdens, and have limited or no room for interest-rate cuts after reductions that countered the financial crisis of 2008.

In Beijing, Xi told U.S. counterpart Joe Biden and business executives that global confidence must be rebuilt after “destabilizing factors” intensified. Xi said Biden briefed him on the steps America was taking to spur growth and tackle its deficit, with the Chinese leader expressing confidence in the U.S. economy’s resilience.

China’s benchmark Shanghai Composite Index closed 1 percent lower, down about 10 percent for the year.

In Hong Kong, Chan, the secretary for financial services and the Treasury, told Bloomberg Television that investors should “stay calm” and not be “spooked by the market.” Market volatility may persist as investors monitor the sovereign-debt crisis and the risk of a “double-dip” recession in the U.S., he said.

In Seoul, central bank official Min Sung Kee said that investors seem “too nervous” and are reacting “more than what I expected.” In a phone interview, Min, director general of the financial markets department, said that officials are “watching the markets 24 hours a day and we need to monitor the U.S. market more closely tonight.”

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Kate Andersen Brower in Washington at kandersen7@bloomberg.net

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