JAPAN - Fund managers have expressed their disappointment over the appointment of Toshihiko Fukui as the new Bank of Japan (BoJ) governor.
Barclays Global Investors UK chief economist Haydn Davies said that although there will be improvements in the Japanese currency pension funds should be aware that the new governor will not make any radical changes to its economy.
Davies said: “Toshihiko Fukui is a renowned conservative who, far from being an outsider, actually worked at the bank until five years ago.
“He is likely to pursue the same course as his predecessor [Masaru Hayami].”
Toshihiko Fukui served as deputy governor of the BoJ between December 1994 to March 1998. He has also been vice president of the Japanese Association of Corporate Executives (Keizai Doyukai) and director of the Fujitsu Research Institute.
Denis Clough, head of Japanese equities at Schroders in the UK, agreed that the appointment represented no “realistic change” for Japan.
“More radical supply side measures are needed but these are not under the control of the Bank of Japan,” he said.
But Govett Investment Management believes that despite the Japanese economy sending out confusing signals, the country’s stocks are still one of the world’s “more attractively valued equities”.
Govett Japanese opportunities fund manager Kerry Goh said: “We are confident that the short-term financial risk is already easing as a result of aggressive fund-raising by major banking groups and the Japanese Financial Services Agency’s softening stance towards banking regulation.”
However, some analysts have highlighted how a drawn-out conflict in the Gulf is likely to damage the already beleaguered Japanese economy further.
According to reports, the BoJ said that it was monitoring the situation closely and was ready to inject extra liquidity into Japan's financial system if necessary.
Clough added that he expected the economy to be “pretty stagnant” over the next two to three years, but remained optimistic about the short- to medium term prospects for the Japanese stock market.
“Companies have been restructuring and are generating a lot of free cash flow and are pretty cheap on the cash flows they are generating,” he said.
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