Japan Reports 10% Jump In Exports

Shinzo Abe, Japan’s new Prime Minister has brought in a wave of changes with his newly framed policies. Popularly termed as 'Abenomics', his policies have seen the Japan GDP rising by 4.1% in the January to March 2013 quarter against the originally reported rise of 3.5%. Abe's strategy includes policies that will boost the economic growth of the country and raise the rate of inflation to 2%. The Yen has also depreciated to USD 94 against the US dollar.

Following these developments, the Bank of Japan (BOJ) has promised a massive quantitative easing programme which will see the BoJ buying bonds worth USD 1.4 trillion. According to the plan, it will purchase bonds worth USD 70 billion every month. The aggressive policies mean that Japan will witness the doubling of its monetary base in the next 2 years. The results of this are already visible as reported in the recent trade data. The trade data for April 2013 indicates that Japan's current account balance has doubled.

For May 2013, the country’s trade has shown further improvement. Its total exports rose by 10.1%, more than what was forecasted by the market. Its exports to the USA rose by 16% while those to China rose by 8.3%. Exports to the Europe, however, declined by 4.9% over the weakness in the Eurozone countries. The depreciation of the Yen is quite crucial for Japan as it makes its products very competitive against the products of other countries. Overall, this augurs well for the Japanese companies which will experience growth both in terms of revenues and profitability going ahead.

The Japanese markets are showing fantastic growth. Nikkei has surged over 30% this year compared to near 12-13% growth in the S&P 500 index. Not to forget the recent drop in the Japanese equities. Over the robust business growth prospects, the equities are attracting humongous liquidity. The bond buying program of BoJ will further help the equity markets rise.

The Japanese Yen has depreciated by 10.14% this year so far. The weakening of currency augurs well for Japanese businesses and equity markets. The Japanese equity markets are thus set to write a new growth story.