International News 20/05
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Japan's GDP has contracted, which is likely to complicate the Bank of Japan's plan to raise interest rates.
Japan's economy contracted by 2.0% on an annualised basis in the first quarter of 2024, driven by a decline in private consumption and weakened external demand. This presents a challenge for policymakers as the central bank aims to raise interest rates from near-zero levels. The figure represents a quarterly contraction of 0.5%, which is lower than the expected 0.4% decline predicted by economists. Private consumption, a significant contributor to Japan's economy, declined by 0.7%, marking the fourth consecutive decline, the longest since 2009. Capital expenditure, a key driver of private demand-led growth, also declined by 0.8%, despite strong corporate earnings. Furthermore, external demand, as measured by exports minus imports, decreased by 0.3 percentage points from the initial GDP estimate for the first quarter. These results underscore the difficulties currently facing Japan's economy and the necessity for meticulous policy considerations.
Japan's dividend payouts and share buybacks have increased.
Japanese companies are increasing dividend payments and launching more share buybacks, which is providing a boost to the market. A total of 53% of companies that have reported earnings so far will raise dividend payments in the current fiscal year, as the Tokyo Stock Exchange continues to exert pressure on companies to improve capital efficiency. This corporate action has helped the Topix index rebound after it fell nearly 10% from its high in March. Furthermore, share buybacks in Japan have reached an all-time high, with a total value of ￥1.2 trillion in April, according to Goldman Sachs. These actions have led to an increase in stock prices, with companies like Itochu Corp. announcing a ￥150 billion share buyback, resulting in a surge in their share price. In summary, investors view these actions as beneficial in enhancing capital returns.
https://internasional.kontan.co.id/news/pembayaran-dividen-dan-buyback-saham-jepang-meningkat
Rupiah Exchange Rate Has the Potential to Continue Its Strengthening Today, Here's What Monex Analysts Say.
The rupiah strengthened against the US dollar at the close of trading on Wednesday. The rupiah closed 0.45% higher at Rp 16,027 per US dollar. The Dollar Index fell to 104.74. The Jakarta Interbank Spot Dollar Rate weakened to IDR 16,070 per US Dollar. The rupiah's movement will continue to be influenced by external factors and positive sentiment was provided by the slight decline in CPI data. This increases the chances of a US interest rate cut. In terms of domestic sentiment, Indonesia's goods trade balance recorded a surplus of USD 3.56 billion in April 20/24, but this was lower than the previous month. Despite the surplus, the trade balance declined on a monthly and year-on-year basis.