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Overvalued yen hampers recovery in ‘bust Japan’

Neptune head of research and manager of the Neptune Japan opportunities fund Chris Taylor has declared that Japan is bust.

Taylor says the yen is overvalued and global multinationals are “the only functioning parts of the economy”.

He says an overvalued yen is hurting the recovery process by hampering the tax take on multinationals’ profits.

Taylor adds the G7’s intervention to stabilise the yen after its dramatic rally following the earthquake was a necessary decision that will ultimately aid Japan in its recovery.

He says: “Given the yen’s rally, the G7 decided to intervene to stabilise it, to which no members objected. They understand Japan’s predicament and the Bank of Japan’s monetary intervention has not been sterilised.

“This corresponds with our analysis – Japan is bust, the currency is overvalued and the only functioning parts of the econ- omy are the large global multinationals. The greater their profits, the greater Japan’s tax take – with the multinationals’ profits being the only way to lift the latter quickly – and a strong yen restricts this possibility.”

Despite the most recent estimate for reconstruction costs in the Tohoku region of ¥5trn-¥20trn, the government’s share of liability is likely to remain comparatively low, Taylor says.

He says 95 per cent of the population do not have earthquake insurance and those who are part of the government earthquake insurance scheme will only get back about 30-50 per cent.

Hargreaves Lansdown investment manager Ben Yearsley says: “Japan is in recession and you wonder how it will pay it off, but the Japanese people keep buying the debt through government bonds. It is internal debt and therefore can be renegotiated much more easily.”



FSA sets timeframe for FSCS funding review

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New carry-forward rules could halt VCT surge

Hargreaves Lansdown investment manager Ben Yearsley says the new carry-forward rules on pension contributions could block a surge in sales of venture capital trusts for the next tax year. From April 6, the annual allowance on pension contributions will be reduced from £255,000 to £50,000. However, new carry-forward rules allow unused contributions of up to […]

Phoenix pressing ahead with acquisition plans

Phoenix is pursuing an aggressive acquisition strategy and predicts a number of companies running closed funds will look to offload their books. The firm’s 2010 results show an £81m fall in profits, from £469m to £388m, which it attributes to a one-off longevity inflation in 2009. Group chairman Ron Sandler says: “We expect to grow […]

Threadneedle goes overweight Japan

Threadneedle has further increased its allocation to Japanese equities after the earthquake earlier this month, taking it to overweight from neutral. Mark Burgess, the chief investment officer, says the group has added to equities in general, and Japan in particular. Threadneedle has more than £1 billion of assets under management in Japan.

 “We have added […]

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In Focus — May 2015: private medical insurance market in Germany

Welcome to the latest edition of In Focus. In this issue, Jelf examines the private medical insurance market for employers with expatriate workforces in Germany. This includes the common challenges faced in sourcing appropriate coverage, along with a selection of available solutions. This will be of particular interest to HR/reward decision makers with employees based in Germany. It will assess the cultural norms, risks and backdrop that are relevant to organisations with expatriate staff in this location.


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