Japan March Industrial Production Down

Japan March Industrial Production Down

April 28, 2005

Just spoke with my delightful daughter Jessica, who is up late working in Tokyo (moshi-moshi). Today’s weak growth numbers to the contrary, she reports an increasing awareness among Japanese managers of cash-flow, asset management, dividend, and shareholder pressure issues that are all good long-term signs for Japanese equities.

We got more numbers today (well, actually tomorrow, given time zones and all) that show (showed, will show? I hate the time zone thing) March Industrial Production fell 0.3%, after -2.3% in February. Retail sales fell in March too, by 0.9%; the BOJ announced the Japanese CPI will fall again (0.1%) this year, the 8th year in a row. Apparently, they are trying for a personal best. Producer prices, however, increased, due to higher energy and commodity prices. Employment fell by 270K.

Korean Industrial Production in March was up 3.8% annual rate. The difference? Korea is relatively much more driven by demand in China, where consumers this year will buy 500 million new cell phones. Japan is more tied to US demand for cars and electronic goods.

The BOJ is a contributing factor in the Japanese slowdown. Although they kept rates flat at today’s meeting, recent votes have not been unanimous and there is talk of ending the quantitative easing policy that has helped stabilize falling land prices since March 2001.

I am long Japanese equities today. Like the longer term story, not the short-term one. Hmmm. Stay tuned.

JR

John Rutledge

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