Abe Adviser Hamada Doubts Japan Economy Showing Real Improvement

September 5, 2013 Leave a comment

Abe Adviser Hamada Doubts Japan Economy Showing Real Improvement

By Keiko Ujikane and Takashi Hirokawa – Sep 4, 2013

Koichi Hamada, an adviser to Prime Minister Shinzo Abe, said it was too early to know whether Japan’s economy has turned the corner under the economic policies known as Abenomics. “Various economic indicators, including investment data, are picking up, but I’m not sure if they show a meaningful improvement,” Hamada said at an event today at Bloomberg’s Tokyo office.Hamada reiterated that a planned increase of the sales tax should be postponed or made in smaller steps, saying growth needs another year or so to reach its potential. Abe will decide whether to proceed with the move to rein in the world’s largest debt burden in early October after examining business confidence and revised growth data.

The former Yale University professor said it’s questionable whether Japan needs to go ahead with raising the levy on consumers given the possibility that it could derail Abe’s economic agenda.

Capital spending was unchanged from a year earlier in the second quarter after a 3.9 percent drop in the first three months of the year, a finance ministry report showed this week. Business investment by manufacturers fell 9.1 percent in the April-June period, a third quarter of decline.

Gross domestic product preliminary data showed an annualized 2.6 percent expansion in the second quarter from the prior period, a third straight quarterly gain. The expansion in the world’s third-largest economy has been supported by the Bank of Japan’s unprecedented easing, and a yen that has weakened 13 percent against the dollar this year.

First Arrow

Hamada said today that monetary policy, the first of Abe’s so-called three economic arrows, is working well.

He was one of 60 people including business leaders, economists and consumer advocates who sat on panels last week to discuss the merits of proceeding with the plan to raise the sales tax to 8 percent in April from the current 5 percent, with a later bump to 10 percent in October 2015. Most members advised the government to back the move even as they urged stimulus to cushion the economic blow.

Postponing the tax increase would have a large and negative impact on Japan’s financial markets, 22 of 32 economists said in a Bloomberg News survey.

For Related News and Information: Abe Seen Facing Stock Rout in Case of Japan Tax Rise Delay Abenomics Litmus Test Looms as Pressure Mounts on Tax Policy Abe Gets Ammunition for Sales-Tax Increase With G-20 Set to Meet

To contact the reporters on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net; Takashi Hirokawa in Tokyo atthirokawa@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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