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Japan’s Abenomics May Be Losing Steam in its Second Year

As the second year of Abenomics progresses, Prime Minister Shinzo Abe’s program of coordinated monetary and fiscal stimulus and structural reform has lost some of its lustre. Not only have Abe’s approval ratings fallen below 50 per cent for the first time since he took office in December 2012, but a recent poll in the right-wing Sankei Shimbun found that, for the first time, disapproval of Abe’s economic policies had exceeded its approval ratings, with 47 per cent opposed and 39 per cent in favour.

Global Economic and Market Preview

The week ahead is eventful. Investors will learn of the results of review and stress test of European banks. The Federal Reserve meets, as do three other central banks (Bank of Japan, Sweden’s Riksbank and the Reserve Bank of New Zealand. Important elections were held in Ukraine and Brazil over the weekend.

Currency Review and other News from the Markets

The US dollar gained on most of the major foreign currencies last week, but the overall tone, leaving aside the yen, was largely consolidative in nature. The greenback was soft in the first half of the week but recovered in the second half.

Help for Thailand’s Economy Can Come via Infrastructure Spending

In May 2014, the Thai army, known as the National Council for Peace and Order (NCPO) staged a coup d’état to prevent civil war breaking out after months of political deadlock and administrative paralysis. Since then, the interim constitution has been enacted, the new cabinet has received royal endorsement, and the National Legislative Assembly and the National Reform Council have been established. The NCPO has asked to stay in power for one to two years to restore stability.

Canada’s Economy Provides an Extra 74,000 Jobs

Recently, Canada’s economy boosted the potential workforce by adding an extra 74,000 jobs into the mix, pushing the unemployment rate towards its lowest figure in six years. Statistics Canada filed a report that the jobless number has now reached 6.8%, showing a fall of 0.2 percentage points.

The good news is highly welcome in Canada, a country that has been experiencing its worst slump in the labor market since the recession in 2009. What do you expect when everyone has to pay for everyone else’s health care? This is a huge drain on the economy.

A Focus on Currencies, Brazil’s Election, EU Politics and Ebola

The dollar is little changed on the day against the majors. The euro is trading at $1.2650 and the pound at $1.6050. The dollar is just above ¥108.0 against the yen.

There was also little notable price action in the EM space except the ruble, which continues to underperform and make new all-time lows. TRY and ZAR are weaker on the day. BRL closed at 2.50 yesterday, after making a cycle high of almost 2.52 ahead of Sunday’s election.

What’s Happening in the Emerging Markets?

1) India’s equity index continues to outperform following Prime Minister Modi’s decision to end fuel subsidies on diesel

2) On Friday, Moody’s cut Russia by a notch to Baa2 and kept the outlook at negative

3) Russian state oil company Rosneft is reportedly seeking over RUB2 trln from the Wellbeing fund

4) South Africa’s mid-term budget review was positive

5) Petrobras had its credit rating cut by Moody’s

Japan Tries ‘China Plus One’ Strategy with Vietnam

As Japan seeks to diversify its investments beyond China, an opportunity arises for Vietnam to attract greater international investment.

Market Sentiment Remains Fragile

Last week’s drama was not the beginning of something as the pessimists and cynics would have it. Our inclination that it was the end of something–that the pendulum had swung unreasonably far unreasonably quickly–is panning out

Japan PM Shinzo Abe’s Economic Strategy Includes “Womenomics”

‘Womenomics’ is a key pillar of Prime Minister Shinzo Abe’s economic growth strategy. In 2013, just 64 per cent of Japanese women aged 15–64 were participating in the labour force — a low rate by OECD standards. As Japan’s labour force is already in decline, it is wasteful that women, and particularly those who have a higher education, have been underutilised. To address this, Abe has set a target to increase the ratio of female managers to over 30 per cent by 2020. In response, several large firms have set similar numerical targets.