Bank of Japan prudent on recovery

Despite the recent upward surprises — GDP increased by 1% q/q
in Q1 and exports grew strongly in April — the Bank of Japan
remains prudent, citing the high degree of uncertainty about the
global economy. As inflation is projected to remain well below
the 1% target, the Bank maintains is extremely accommodative
policy.

• In April, the trade balance worsened to JPY 520 billion, in line with
expectations. However, the seasonally adjusted trade deficit improved
to JPY480 billion (1.1% of GDP, annualised) from JPY 617 billion in
the preceding month. The deficit is mainly caused by increased fuel
imports following the stoppage of all nuclear reactors, most of them
for regular maintenance.

• Exports were surprisingly strong, +6.3% from March in volume
after being flat in March. They are in particular driven by strong US
demand, a signal that the recovery is continuing. However, shipping
to China and the European Union remained lacklustre. By contrast,
import growth slowed to +2.2% from March in volume.

• Today, the Bank of Japan’s Policy Board decided to keep its
already very loose policy stance unchanged. The overnight call rate
will be maintained at around zero and the Bank will keep its asset
purchase programme (including fixed-rate funds supplying operations)
at a total of JPY 70 trillion.

• In its monetary statement, the Board declared that “the economy
was shifting towards a pick-up phase, although activity had remained
more or less flat”. This clearly underplayed the strong GDP rebound in
Q1 (1% q/q), which could be attributed to some one-off factors such
as the ending of the flooding in Thailand and the re-introduction of the
purchase incentives for eco-friendly cars.

• The BoJ expects the economy to return to a moderate recovery
path, largely driven by reconstruction-related demand and the
strengthening of world trade in particular to emerging and commodity-exporting
economies. On prices, the Bank projects inflation (excluding
fresh food) to remain at around 0, well below the Bank’s 1% target.

• The Board sees as major uncertainties the prospects for the
European debt problem, the momentum towards recovery for the US
economy and the likelihood of emerging and commodity-exporting
countries simultaneously achieving price stability and economic
growth.

Upcoming Events

31st May 2012
SIX – ConventionPoint, Zurich

PIP Investor Zurich

For the 5th consecutive year the PIP Investor Zurich Conference 2012 will feature contributions from senior investment specialists and major allocators, analysing current behaviour across financial markets. As downgrades and politics continue to implicate the growing concerns in Europe, we evaluate to what extent will the impact of inflationary pressure have on global bond and commodity portfolios? 

With unprecedented volatility in equity markets, are traditional investment techniques still appropriate for institutional investors and does diversifying a portfolio really work in today’s financial markets? Our experts will evaluate whether the Swiss franc is likely to get stronger and what lessons have hedge fund managers learnt from the previous crisis? All this and more from this year’s PIP Investor Zurich conference. 
Alongside the main conference will feature a host of interactive workshops, dedicated exclusively to a number of timely investment strategies

PIP Investor Zurich

25th September
SIX – ConventionPoint, Zurich

Global ETPs delivered total AUM growth of $191.1bn so far in 2012 driven by $66.0bn of inflows and $125.1bn of favourable market and exchange rate movements. Fixed income was the top asset gathering category for the year with $25.5bn or 39% of total net new assets. North America Equity attracted $21.6bn YTD or 33% of total ETP inflows. Europe equity ETPs relinquished ($5.9bn) YTD concentrated in April outflows from German DAX products.* 

This ETF seminar will provide a dedicated and educational platform, offering professionals a concise and timely insight into the latest themes and topics concerning the ETF landscape. 

As the industry continues to evolve, professional investors are challenged with new themes concerning the ETF landscape. The seminar will elaborate on topics concerning ETF product innovation, optimum strategies for portfolio implementation, due diligence of ETPs, as well as looking at regulatory developments by ESMA.