The Business Times

Are foreigners losing faith in Abenomics?

BOJ's admission that export prospects are not bright is scary

Published Sun, Aug 10, 2014 · 10:00 PM
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WAS the sudden, sharp drop in the Tokyo stock market last Friday a knee jerk reaction by investors to news that US President Barrack Obama had authorised fresh air strikes in Iraq, thus provoking a resumption of "risk-off" attitudes? Or did it signal that foreign investors are losing faith in Abenomics and are heading for the exit?

Analysts say this week should provide some answers to the question posed by the 3 per cent drop in Tokyo prices on a day when other markets were largely unchanged despite escalation of fighting in both Iraq and the Ukraine.

What has set alarm bells ringing is the Bank of Japan's official acknowledgment last Friday after its policy board met that export prospects for Japan's still heavily export-dependent economy are not looking bright, at a time when domestic demand is still suffering from the impact of a consumption tax hike several months ago.

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