Japan opposition's bond purchase plan criticised

Plans by Japan's prime ministerial front-runner to force the central bank to buy government bonds were criticised Monday as potentially "devastating" for the whole economy.

Shinzo Abe, the leader of main opposition Liberal Democratic Party, told supporters at the weekend he would make the Bank of Japan participate in the scheme -- effectively printing money to generate inflation.

Japan has been mired in deflation for years, a situation that discourages consumers from spending in the knowledge that products will be cheaper in the future, sapping demand and dissuading firms from investing.

"I want the Bank of Japan to buy all construction-related government bonds, whereby new money will forcibly circulate in the market," Abe said on Saturday.

Abe, a one-time premier who was re-elected as leader of the LDP last month said he would pursue a policy of active spending and aggressive monetary policy, and would expect the central bank to follow suit.

"I want to pick a central bank governor who will support an inflation target" of between two and three percent, said Abe.

His comments come days after he pledged to call for "unlimited" stimulus measures if he won the December 16 general election.

Analysts rounded on the calls on Monday, saying they endangered the independence of the Bank of Japan and risked weakening fiscal discipline, possibly with disastrous effects.

"The purchase of government bonds is drastic medicine, a powerful drug that might work, but carries the risk of devastating the whole economy," said Yoshikiyo Shimamine, chief economist at Dai-ichi Life Research Institute.

The measure "would bring about an expectation for inflation... but with unease in the bond market and doubt about the sustainability of Japan's finances, it could only generate stagflation," he said, referring to a situation in which prices rise but the economy stands still.

"With market trust in Japan sinking, the yen could plummet, for instance, to 200 yen against the dollar" from around 81 yen on Monday, leading to a flight of foreign capital as the value of Japanese assets devalues, he said.

Hiromichi Shirakawa, analyst at Credit Suisse, said "what Abe wants the Bank of Japan to do is based on the LDP's policy of expanding public spending."

"Because the LDP wants votes from the (job-strapped) countryside, they plan to spend on public works projects, but with private saving of ageing Japan being unable to finance them, the only reliable money bag is the BoJ."

"So the question is two-fold: Isn't their programme simply pork-barrel politics? And is it really okay to rely on the BoJ to finance it?"

"If the BoJ is to finance the bond issuance, the government has to be ready to pay at maturity, and to me the only solution is, like Republicans say in the United States, to cut social welfare and medical costs," Shirakawa said.

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Global equity deals rise in third quarter but down 30 percent year-to-date - Thomson Reuters data Reuters - 4 minutes 35 seconds ago

    Global equity fundraising rose in the third quarter, Thomson Reuters data showed on Friday, but failed to make up for the sharp slowdown of the first half of 2016, when volatile markets deterred listings. Bankers said a robust pipeline of deals may … More »

  • Oil prices down on profit-taking after two-day jump
    Oil prices down on profit-taking after two-day jump Reuters - 8 minutes ago

    Oil prices dropped on Friday on profit-taking, after rising 7 percent in the past two sessions, amid doubts that OPEC's first planned output cut in eight years would make a substantial dent in the global crude glut. The Organization of the … More »

  • Windfall in District 20
    Windfall in District 20 The Edge Property - 9 minutes ago

    The bigger profit of $6.1 million accrued to a two-storey bungalow at Windsor Park Estate, which was sold for $8.6 million, or $1,203 psf on land area. Since the seller purchased the freehold property with a land area of 7,147 sq ft in June 2006 at … More »

  • Tokyo shares open down on Deutsche Bank worries AFP - 12 minutes ago

    Tokyo shares opened lower Friday as Deutsche Bank's woes dented financial stocks while sentiment was also hit by weak Japanese data that aggravated concerns about the economy. The weak start followed a ... … More »

  • Nutanix IPO shows risks of 'unicorn' valuations Reuters - 15 minutes ago

    In the run-up to its initial public offering, cloud computing company Nutanix scrambled to avoid a situation that has increasingly marred technology IPOs: a price that is below the most recent private funding round. After initially pricing shares … More »

  • Nutanix exceeds expectations in upsized IPO Reuters - 16 minutes ago

    San Jose, California-based Nutanix's share price exceeds the $13.40 value last placed on its shares in a 2014 funding round, an upgrade encouraging for the many unprofitable technology companies that, like Nutanix, have been weary of testing public … More »

  • 4 Ways Money Can Stop You From Being Successful
    4 Ways Money Can Stop You From Being Successful GET.com - 27 minutes ago

    I'm sure many Singaporeans would agree that having money is part of being successful. But have you... … More »

  • Tenants’ flight to quality puts pressure on Grade A office space rents
    Tenants’ flight to quality puts pressure on Grade A office space rents The Edge Property - 31 minutes ago

    Tenants’ flight to quality has put pressure on rents of Grade A office space, according to Knight Frank’s latest Singapore 3Q2016 office bulletin. Meanwhile, Grade A+ office space in the same area saw a rental decline of 2.1% to between $9.30 and … More »

  • Homebuyers' wish list
    Homebuyers' wish list The Edge Property - 31 minutes ago

    Private homes priced between $1 million and $1.5 million were the most sought-after among the respondents polled in a joint survey by Knight Frank and The Edge Property. The survey found that 217 of the 500 respondents, or nearly one in two, were … More »

  • China Seeking to Succeed Where Japan Failed in Yuan Global Push Bloomberg - 42 minutes ago

    The Japanese yen’s share of global reserves reached a record 8.5 percent in 1991 as the nation’s post-War industrial boom made its economy the world’s second-largest. While the yen is still ranked third for trading and fourth for payments, it now … More »

  • Japan CPI, consumption fall again, keeping Bank of Japan under pressure Reuters - 47 minutes ago

    Japan's core consumer prices fell in the year to August, a sixth straight drop, keeping the Bank of Japan under pressure to ease monetary conditions further as it reboots policy in a bid to hit 2 percent inflation more quickly. Household spending … More »

  • ‘Whistle-Blower’ Suit Against Chinese Bank Withdrawn in New York Bloomberg - 52 minutes ago

    Natasha Taft, the bank’s former chief compliance officer in the city, had alleged she was penalized for telling the Federal Reserve of money-laundering risks from international trade-finance transactions. The case was Taft v. Agricultural Bank of … More »

  • Singapore Insurance Policies as Investment Products
    Singapore Insurance Policies as Investment Products ZUU online - 1 hour 1 minute ago

    Insurance policies currently available for individuals to purchase in Singapore: 1. Ter... … More »

  • Asian Stocks Fall as Banks Are Dragged Lower by Global Concerns Bloomberg - 1 hour 3 minutes ago

    The MSCI Asia Pacific Index dropped 0.9 percent to 140.05 as of 9:07 a.m. in Tokyo,. A measure of Asian financial stocks weighed most on the benchmark, falling 1 percent as Japan’s Mitsubishi UFJ Financial Group Inc. and Australian lenders … More »

  • Chinese Yuan’s Ascent to Global Reserve Status: A Timeline Bloomberg - 1 hour 4 minutes ago

    Its entry into the International Monetary Fund’s Special Drawing Rights -- alongside the dollar, euro, pound and the yen -- will help further China’s efforts to boost international usage of the yuan at a time when the currency’s share of global … More »

  • Japanese Shares Drop as Lenders Slump on Deutsche Bank Concerns Bloomberg - 1 hour 13 minutes ago

    Deutsche Bank’s New York-listed shares tumbled after Bloomberg News reported about 10 hedge funds doing business with the German lender have moved to reduce their financial exposure. The rout follows a request from U.S. authorities that Deutsche … More »

  • Alarm Bells Sound in New York as Duterte’s Audit Shakes Up Mines Bloomberg - 1 hour 23 minutes ago

    The threat to shutter about three-quarters of the nation’s mines risks savaging the country’s reputation among investors, according to the head of a company whose operations face suspension. “I just came from New York, and investors are very … More »

  • Goldman feels the heat in Asia as IPO engine slows
    Goldman feels the heat in Asia as IPO engine slows Reuters - 1 hour 28 minutes ago

    Goldman Sachs (GS.N) failed to make it to the upper echelon of Asia's equity market fee earners for the first time in more than a decade, hit by a squeeze in fees that is prompting the U.S. bank to cut back jobs in the region. Goldman has shared … More »

  • Japan’s Consumer Prices Fall for Sixth Straight Month in August Bloomberg - 1 hour 28 minutes ago

    Industrial production made a modest gain, while household spending slumped and the jobless rate held near the lowest since 1995. Consumer prices excluding fresh food, the Bank of Japan’s primary gauge of inflation, dropped 0.5 percent in August … More »

  • VW's Skoda to ponder U.S. production amid market push Reuters - 1 hour 49 minutes ago

    Volkswagen's (VOWG_p.DE) Czech division Skoda said it will assess the possibility of building cars in the United States as it considers selling in the world's second largest auto market where its parent continues to grapple with an emissions … More »

  • Most Asian Index Futures Drop Amid Bank Rout; Oil, Copper Swing Bloomberg - 1 hour 51 minutes ago

    Shares in New Zealand fell early Friday with U.S. index futures, as contracts on equity gauges in Japan, Australia and South Korea foreshadowed losses. Financial stocks drove the S&P 500 Index lower last session amid concern over Deutsche Bank AG … More »

  • Bunker-busting bombs close Aleppo underground schools: charity
    Bunker-busting bombs close Aleppo underground schools: charity AFP News - 2 hours 14 minutes ago

    Bunker-busting bombs are putting children in so much danger in Syria's Aleppo that they won't even be able to return to underground schools when classes resume this weekend, a charity said Friday. The "ferocious assault" on Aleppo could deprive … More »

  • Elliott Management takes 8.1 percent stake in Mentor Graphics Reuters - 2 hours 34 minutes ago

    (Reuters) - Activist hedge fund Elliott Management said it picked up an 8.1 percent stake in electronics hardware supplier Mentor Graphics Corp (MENT.O), a few months after Carl Icahn exited the company. ... … More »

  • Obama, Merkel condemn 'barbarous' Russian, Syrian strikes on Aleppo
    Obama, Merkel condemn 'barbarous' Russian, Syrian strikes on Aleppo AFP News - 2 hours 42 minutes ago

    US President Barack Obama and German Chancellor Angela Merkel condemned what they called "barbarous" Russian and Syrian regime airstrikes on Aleppo during a phone call Thursday, the White House said. The Syrian government and its ally Russia "bear … More »

  • Deutsche Bank shares sink 7% as hedge funds pull money out AFP - 3 hours ago

    Deutsche Bank shares sank seven percent Thursday after news that a number of hedge funds had pulled money out of the German giant amid worries over its financial strength. The move to sell off the German ... … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.156-0.004-2.50%
    N21.SI
    3.95-0.07-1.74%
    Z74.SI
    0.735-0.010-1.34%
    G13.SI
    0.355-0.005-1.39%
    E5H.SI
    8.60-0.08-0.92%
    O39.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    1.70+0.18+11.84%
    BAI.SI
    0.255+0.015+6.25%
    BQM.SI
    0.128-0.002-1.54%
    A50.SI
    0.475+0.020+4.40%
    CZ4.SI
    1.305-0.025-1.88%
    S51.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    1.205-0.005-0.41%
    BJL.SI
    0.435-0.015-3.33%
    T55.SI
    0.355-0.005-1.39%
    E5H.SI
    2.08-0.01-0.48%
    P34.SI
    0.2250.0000.00%
    5EN.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3652+0.0013+0.09%
    USDSGD=X
    1.5313+0.0013+0.08%
    EURSGD=X
    1.7693+0.0012+0.07%
    GBPSGD=X
    73.9700-0.101-0.14%
    SGDJPY=X
    5.6783-0.0057-0.10%
    SGDHKD=X
    3.0323+0.0094+0.31%
    SGDMYR=X
    9,516.8213-25.8916-0.27%
    SGDIDR=X
    4.8846-0.0024-0.05%
    SGDCNY=X
    1.0416+0.0007+0.07%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,327.10+1.10+0.08%
    GCZ16.CMX
    19.17-0.02-0.12%
    SIZ16.CMX
    95.01-0.66-0.69%
    ^XAU
    2.190.00-0.05%
    HGZ16.CMX
    43.85+0.41+0.94%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.12-0.01
    ^FVX
    1.56-0.01
    ^TNX
    2.28-0.01
    ^TYX