HONG KONG — The Japanese central bank on Monday released minutes of a recent meeting that showed some board members skeptical of the bank’s own strategy of lifting Japan from deflation, while another big fall in the country’s stock market stoked fears of further volatility in the weeks and months ahead.
But European stocks shrugged off the slide on the Japanese stock market Monday and traded higher as a member of the European Central Bank repeated the bank’s commitment to low interest rates. Stock markets in Britain and the United States were closed for public holidays.
In Tokyo, the minutes of the Bank of Japan’s policy meeting on April 26 revealed a degree of doubt about the bank’s ability to inject a healthy dose of inflation into an economy that has suffered from crippling deflation for years.
‘‘A few members’’ pointed out that the target of 2 percent inflation appeared ‘‘difficult to achieve’’ in the planned time frame of about two years from now, ‘‘since it was highly uncertain whether changes in inflation expectations would lead to a rise in the actual rate of inflation,” according to the minutes.
Some board members also noted that the bank’s aggressive easing policies appeared to have been perceived by the markets as ‘’contradictory’’ — comments that highlighted the challenges that the bank and policy makers are wrestling with.
The bank, on one hand, has committed to ending deflationary expectations and sparking an economic recovery by flooding the economy with money, a logical result of which would be rising long-term interest rates. But the bank has also committed to keeping those interest rates in check, partly by buying large amounts of government bonds. That has sowed confusion among market players over whether they should welcome or panic at the recent rise in long-term rates.
On Monday, the Nikkei 225 share average in Tokyo fell 3.2 percent. The decline followed a 7.3 percent slump last Thursday, when a rally of about 80 percent since mid-November came to an abrupt end.
“While it’s still difficult to clearly pinpoint a reason, the big market falls themselves have started to stoke fear among investors,” Koichi Fujishiro, an economist at the Dai-ichi Life Research Institute, said in a report. He said that high-frequency trading by investors looking for short-term gains helped magnify those market swings.
“Japan’s fundamentals have not changed,” Mr. Fujishiro said. But, he added, “turmoil in financial markets won’t settle down overnight, and we are likely to see nervousness remain for some time.”
An article carried by the Nikkei business daily on Monday urged calm.
‘’Investors need a bird’s-eye perspective of market movements, not a bug’s-eye perspective,’’ wrote Ryo Suzuki, a columnist who is a member of Nikkei’s editorial board. “Things look different from a larger perspective,” he said. “For people who sat out on the market surge, this might be a good time to get in on the action.”
Japanese stocks have been on a tear since last November, swept by a wave of optimism that bold plans outlined by Shinzo Abe, who took over as prime minister in December, would succeed in breathing life back into the Japanese economy.
Volatility in the Japanese bond markets, a renewed strengthening of the yen and concerns about the dynamism of China’s economy all have combined in recent days to underline the challenges facing Mr. Abe and the Japanese central bank as they seek to reignite growth.
Analysts have struggled to explain the exact cause of the recent reversal, saying that a range of factors were probably at play and continue to fan nervousness in the market.
“There have been times when the market jumped over 1,000 points in a week. We were bound to see a correction,” Yoshihide Suga, the chief cabinet secretary, told reporters in Tokyo. “But Japan’s economy is recovering steadily. So it is extremely important that we react in a calm manner.”
Investors are also concerned that the U.S. Federal Reserve might reduce its own stimulus measures before too long.
The realization that Mr. Abe’s stimulus efforts — in particular, the structural overhauls that are needed to bolster Japan’s long-term competitiveness — face an uphill struggle also have played a part, analysts said, as did profit-taking after the long rally this year.
“Investors have realized that the Japanese market does not just rise and rise,” said Jun Yunoki, an analyst at Nomura in Tokyo.
Article source: http://www.nytimes.com/2013/05/28/business/global/nikkei-sinks-again-as-investors-doubts-linger.html?partner=rss&emc=rss
Speak Your Mind
You must be logged in to post a comment.