It has been an attention-grabbing month in Japan, with North Korea sending a missile over the Japanese island of Hakkaido which has increased tensions across the area. Prime Minister Shinzo Abe described the firing of the missile as an “unprecedented” threat to his country. Despite these high profile events, this only resulted in a fall over the month of 1.34%.
August saw the UK Prime Minister, Theresa May, visit Japan in order to negotiate a post-Brexit trade deal with the country. The Bank of Japan (BOJ) Governor, Haruhiko Kuroda, was also busy and attended a summit in Wyoming for top central bankers. He agreed to maintain their existing accommodating monetary policy and that there will be less need for the central bank to purchase Japanese government bonds to maintain its 0% yield target for the 10 year bond. Kuroda is confident that the BOJ can smoothly withdraw their stimulus when their target of 2% inflation is reached.
Japan released promising economic data that saw retail sales rise 1.9% in July compared to the same period in the previous year. The services sector also continued to expand, although at a slower pace. The case for investing in Japan continues to remain strong with the economic data continuing to improve.