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Tankan Survey Reflects Mixed Sentiment
by Stewart DouglasInvestor and commercial confidence in Japan has fallen, remaining stagnant in places, on the back of ongoing global market volatility according to the results of an official survey released today.
The Bank of Japan’s respected tankan survey, encompassing a body of 10,000 companies, reflected no change in its sentiment index which focuses on the feelings amongst large manufacturing companies. The index remained at 23 from the period June to September.
The indexation figure for non-manufacturing companies was shown to have fallen on the period, down two points to 20 over the same period, in support of the proposition that the Bank of Japan will begin to raise interest rates over the remainder of the year and, more likely, the start of the new year.
The news was initially well received on the Nikkei with investors buying in the wake of the prospect of manufacturing sentiment remaining stable. However, soon after the mood turned to red as investors felt the growing potential for an economic downturn on the back of these figures.
Analysts have suggested that a great deal of the Japanese confidence issues have arisen as a result of volatility and unrest in global credit markets, as well as stock market turmoil in recent months thanks to the sub-prime lending crisis and the global credit crunch.
With the economy still heavily reliant on exports as opposed to private consumption, there is an ongoing fear the continued market suffering in the US and further afield could have an adverse effect on growth and performance within the Japanese economy.
Further economic data from within the US is expected over the course of this week, which could indicate further the extent of the sub-prime losses on the wider economy, and could inevitably have a wider impact on the situation in Japan over the coming months.
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