Monday, March 3, 2003
The overhang of military action against Iraq continues to depress investors worldwide. For the first three days of equities trading last week there seemed to be only one direction - down. But on Thursday investors got their sea legs and began to buy again, taking advantage of new bargain prices. A new scandal over earnings reports hit Europe - equities, already down, plunged some more. The 13 indexes followed here dropped last week despite some gains on Thursday and Friday. Losses ranged from 0.1 percent for the Canadian S&P/TSX composite to 4.7 percent for the South Korean Kospi. The Korean index took a hit when the North Koreans test fired a missile into the Sea of Japan just before the inauguration of new South Korean President Roh Moo-hyun.
With two months of the New Year already gone, the trend in equities continues to be down. The constant barrage of geopolitical rhetoric and looming war combined with mediocre growth and earnings have depressed investors worldwide. Indexes followed here are down for the first two months of 2003, with the exception of the NASDAQ which is holding on to a meager 0.2 percent increase over its close at the end of 2002.
Bank of Japan new governor finally named
Toshihiko Fukui has been named by Junichiro Koizumi, Japan's prime minister, as his choice to be the new governor of the Bank of Japan, pending the Diet's (the Japanese parliament) approval. If approved, he would take over the central bank on March 20th. For those looking for radical change, the appointment is a disappointment and not without controversy. Many believe that since he is a career central banker he will continue the policies of the outgoing governor, Masaru Hayami.
The race for the governorship has centered on the issue of deflation, with more reformist candidates favoring the introduction of an inflation target. But Fukui is pictured as a monetary policy conservative, in line with the mainstream of the Bank of Japan. The nomination indicates that the BoJ probably will not make use of unorthodox measures such as an inflation targeting or the purchase of overseas assets to try to end deflation, but will instead continue the current policy of injecting liquidity into the banking system. The prime minister also named two new deputy governors - Toshiro Muto, former vice-minister of finance, and Kazumasa Iwata, a senior official at the Cabinet Office who doubles as a professor at the University of Tokyo. Mr Muto is one of Japan's most powerful bureaucrats with deep political support, while Mr Iwata is seen as a token gesture to those who want to see at least a sign of reform.
And the beat goes on
