The week has certainly started out very well for Japan. And indeed for Asian financial markets.
First, Tokyo was announced as the site of the 2020 Olympic summer games. Shares of property developers went bonkers overnight on the news. Sumitomo Realty and Development (8830.JP), which has the biggest land bank in Tokyo with the potential for 30,000 new apartments, was up 4.7% overnight on the Tokyo market. Mitsui Fudosan (8801.JP in Tokyo) and Mitsubishi Estate (8802.JP in Tokyo and MITEY in New York), with land capacity to build 15,000 apartments, were up 6.4% and 4.7%, respectively, overnight in Tokyo.
Second, a big increase in capital spending pushed GDP growth in the June quarter up to a revised annual 3.8%. That was an increase from the first estimate of 2.6%. Of course, faster GDP growth is good news for Prime Minister Shinzo Abe’s effort to put Japan back on the path to sustainable growth, but the upward revision in capital spending is particularly significant since Japanese companies have been reluctant to increase capital spending even as consumer spending picked up. This data suggests that may have changed.
Add the news from Japan to news from China and Asian markets began the week with a big dose of optimism. Chinese exports increased by 7.2% in August from August 2012. That was above the 5.5% projection by analysts surveyed by Bloomberg. Consumer inflation rose by just 2.6%, giving the government no need to tighten.
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