Japan achieved its third straight quarter of economic growth during the three months to June, growing at an annualised rate of 1.8% and easing pressure on the Bank of Japan to implement further monetary easing. In comparison, the country’s economy grew by 2.8% year on year over the first three months of 2019
The trade conflict between the US and China continued to affect the region
Unrest continued in Hong Kong during August
Consumer sentiment dropped sharply in South Korea
To view the series of market updates through August, click here
Japan achieved its third straight quarter of economic growth during the three months to June, growing at an annualised rate of 1.8% and easing pressure on the Bank of Japan (BoJ) to implement further monetary easing. In comparison, the country’s economy grew at a rate of 2.8% year on year over the first three months of 2019, and by 1.6% in the final quarter of 2018, having shrunk by 1.9% in the previous quarter.
“There were signs of division amongst policymakers at Japan’s central bank”
Japanese share prices generally fell during August as a stronger yen – boosted by demand from jittery investors – dampened the outlook for exporters. Over the month as a whole, the Nikkei Index fell by 3.8% while the broader-based Topix Index declined by 3.4%. Medium-sized companies – represented by the TSE Second Section Index – fell by 5.5%.
There were signs of division amongst policymakers at Japan’s central bank during the month. BoJ Deputy Governor Masayoshi Amamiya said that the BoJ remains ready to implement additional easing if necessary to avoid derailing the momentum towards price stability. He also highlighted concerns over ongoing uncertainties relating to trade tensions, Brexit and the slowdown in China’s economic growth.
In contrast, however, BoJ official Hitoshi Suzuki cautioned against the possible side-effects that could be created if the BoJ intensifies its monetary stimulus. He warned that negative bank deposit rates could harm the economy by stifling consumer sentiment, and that any destabilisation of Japan’s financial system would make it hard to achieve price stability. His words undermined the BoJ’s pledge to loosen policy “without hesitation” in order to shore up economic recovery.
In Hong Kong, pro-democracy protestors continued to demonstrate their opposition to a controversial extradition bill and the Hang Seng Index fell by 7.4% over the month. Elsewhere in the region, having implemented rate cuts in June and July in a bid to boost economic growth, policymakers at the Reserve Bank of Australia (RBA) held its key interest rate steady at 1% in August. The ASX All Ordinaries Index fell by 2.9% during the month.
Consumer sentiment in South Korea dropped sharply during August, according to the Bank of Korea (BoK). Confidence has been dented by the ongoing trade conflict between the US and China, South Korea’s worsening trade relationship with Japan, falling equity prices, and a decline in export activity. Over the month, the Kospi Index fell by 2.8%.
To view the series of market updates through July, click here
