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    Goldman/Sachs : Der Yen ist 30 % überbewertet ...

    verfasst von Apostroph, Down Town (Switzerland), 14.03.2011, 11:04


    At this stage, it remains impossible to really judge confidently the scale of the damage from the earthquake in Japan and the tsunami that followed. The Japanese Prime Minister described the situation as the biggest challenge facing the nation since WW2. My thoughts are with the people of Japan at this very difficult time and I wish to express my condolences to those who have lost friends and loved ones.

    Inevitably there are now questions raised about the impact on the Japanese economy. Japan is a nation with gross debt to GDP close to 220pct. This is nearly twice the number of Greece and nearly two times worse than the average of the European Monetary Union (EMU) countries. Clearly, the top priority of the Japanese government is to spend whatever is necessary to help reconstruct the devastated areas. In order to deal with a number of important issues that need to be addressed over the long term , further excessive strength of Yen needs to be avoided..

    There have been many times in recent years where many foreign experts have been somewhat bewildered by the timidity of the Bank of Japan given the challenges the country faces. Those challenges are now stepped up one more notch, and the last thing Japan needs is even further strengthening of the Yen.

    The source of Japan's currency strength is of course much of the recent decade's accumulation of current account balance of payments surpluses and with it, the accumulation of huge foreign assets. While the government appears to have a debt problem, the nation as a whole hasn't so far. By definition the current account balance is the difference between national savings and national investment, and Japan's multi decade current account surpluses tell plenty. Nevertheless these national savings have become increasingly dependent in recent years on the corporate sector as the household sector has seen its savings dwindle. While many of us in finance continue to be dazzled by the activities of the infamous Mrs. Watanabe, accumulative savings are in fact dwindling. As I have mentioned before, I never thought I would still be working when the US household savings rate was higher than in Japan, but it has now been that way for over a year. Indeed it appears to be more than double. The US household saves twice as much as Japan's and its gross government debt is less than half. This is not how it used to be.

    As is well known Japan's population started to decline a few years ago, and by 2050 many experts expect it to be around 100 million people or less, some 25pct below today. With rising life expectancy however, this means that unless the Japanese choose to work way beyond normal retirement age, there will be less and less people working to support more and more. According to an interesting article in the Financial Times on Saturday, already 20pct of Japan's over 65's are working in full time employment, supposedly 4 times more than in Europe. They will all have to have to work a lot more, especially in Japan, as well as figuring out ways to encourage parents to produce more children and to immigrate more.

    Of course much of the above has garnered the attention of many overseas minds about Japan's financial plight for a long time including many highly successful investors. Lots have famous tales about how much they lost trying to short JGBs or the Yen, or both. For much of the past 15 years or so, I never really agreed with these views for three reasons, although for the past 2 years, I have shifted into this camp also.

    The first of the three reasons is this: It was true, and still is true that Japan is easily the world's largest foreign creditor. Data from the end of 2009 suggests Japan's net foreign assets were close to $ 3 trillion, dwarfing anyone else's including those of China. When Japan needed more financing because of the Kobe earthquake and its aftermath in the mid 1990's, the international markets bore any negative consequences as Japanese investors repatriated foreign assets to help finance greater immediate domestic needs. Looking broadly at markets on Friday, the behavior of markets suggested a partial rerun. Secondly, even if Japan's real GDP growth rate has been modest and its growth trend weak compared to many other countries, given its demographics, Japan's individual people's wealth hasn't suffered, i.e. GDP per capita hasn't shrunk. This was true before Japan started witnessing deflation and the evidence is now more mixed. Thirdly, Japan's savings rate was relatively high, but this has now started to change especially on a relative basis since the global credit crisis in 2008 and the rebuilding of the US household savings rate. It is this latter point which has caused me to start to think differently strategically.

    In order for Japan to really grow more, Japan will need to see stronger productivity and also perhaps a lower corporate savings rate. This might help bring around stronger real and nominal GDP growth. To arrest the inexorable rise of debt to overall GDP, it would be helped by positive nominal GDP growth. An irony of a decline in corporate savings without an increase in government savings, is that while it might boost nominal GDP, it might also result in some of the funding fears that many have expressed for so long as it would make Japan more vulnerable to foreign sentiment. In some ways, it seems like a lose-lose situation.


    As discussed many observers have often been bewildered by the relative timidity of the BOJ in trying to help boost growth, arrest deflation and to stop the seemingly inexorable rise of the Yen. While one can explain why the Yen is where it is in terms of Japan's net foreign assets, on any generally accepted other means of currency valuation, the Yen is highly expensive. This is obviously true on a simple PPP basis, and in the past couple of years, it has become so on Balassa-Samuelson type productivity adjusted real exchange rate models such as Goldman Sachs' GSDEER. I actually created this model some 15 plus years back to explain why the Yen did what it did. Ironically today, the Yen is close to 30pct overvalued on such a model.

    In recent years there has been a very politically valid argument that the BOJ has resisted measures to deliberately weaken the Yen for both fears of provoking anti Japanese business sentiment in the US (which was rife in the late 1980's and early 1990's), and because of a desire to support the cause for a strengthening of the CNY. The fact is that the Yen has strengthened considerably more than the CNY since the global credit crisis. There is now clearly a case for being bold to ensure a speedy recovery from this tragedy. Events certainly require it.

    Jim O'Neill
    Chairman, Goldman Sachs Asset Management

    "Wir können nicht alle Helden sein, weil ja irgendeiner am Bordstein stehen und klatschen muss, wenn sie vorüber schreiten."

    W. Adair


    gesamter Thread:

  • YEN-Carry-Trade - Achilles, 14.03.2011, 09:16

Wandere aus, solange es noch geht.

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