"The sun is finally rising in Japan," says Roger Bootle in The Sunday Telegraph. But in the context of the strong global economy, these days Japan "hardly gets a mention". Yet the Nikkei 225 has gained almost 8% this year, breaking through the 17,000 barrier for the first time in five and a half years.
The reason for the lack of interest is that Japan "has been mired in a decade-long recession". It lost ground massively against not only the fast-growing countries of Asia, but also other members of the G7, such as the US and the UK. These days, everyone talks about China and India.
But they're missing a trick. Japan is still the world's second-largest economy and its "nascent recovery is one of the most significant events in the world today", says Bootle. Higher Japanese interest rates will bring the end of the carry-trade, which will cause a "shake-out" in bond markets worldwide, plus a stronger yen could trigger an adjustment of the dollar.
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At home, stronger growth will see the current-account surplus fall, which will not only reduce the supply of capital to the rest of the world, but will also cause short interest rates and bond yields to rise, attracting capital into Japan.
The most recent rise in the Nikkei was on the back of strong labour-market figures, including a fall in the unemployment rate to an eight-year low and positive news from the Tankan Survey of business confidence. This "fell below expectations, although it still hinted at continuing economic recovery", says the FT. Most encouraging was the fact that the large manufacturers are short of capacity for the first time since the early 1990s.
As Bootle says, this time "it really does seem that Japan is recovering". The Bank of Japan has announced the end of its zero interest rate policy and, after Monday's Tankan, "a rate hike before October may now be likely", says Credit Suisse. But sceptics believe the economy still may not be strong enough to cope with rising rates, arguing that much of the gain in the Consumer Price Index is due to rising oil prices. Despite his confidence, Bootle also advises caution since "the Japanese authorities are prone to snatch defeat from the jaws of victory".
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