If they can do it so can we........
Singapore warms to land of the setting yen
Sunday, Oct 05, 2014
Fiona Chan
Melissa Tan
The Straits Times
Sushi lovers must be saying "arigatou" to Abenomics.
The deflation-busting economic policies of Japan's Prime Minister Shinzo Abe, which include generous monetary easing, have been pushing the yen down since 2012.
Now, as investors switch their focus to the rising US dollar, the yen has hit new multi-year lows. The Japanese currency touched a six-year low against the greenback this week, and is at its lowest to the Singapore dollar since the Asian financial crisis in 1997.
Traveller interest in Japan has surged and investors are eyeing more property in the land of the rising sun even as currency watchers predict further yen weakness over the coming months.
Dynasty Travel marketing director Alicia Seah said the number of Japan-bound tourists has risen "now that Singaporeans' spending power in Japan is stronger".
The agency has handled nearly 5,000 bookings for Japan in the first nine months this year, a sharp jump from the 3,000 travellers for the whole of last year.
Apart from the weak yen, more direct flights from Singapore to Japanese regions such as Okinawa also contributed to rising tourist interest, she added. "We expect Japan to be among the top destinations for Singaporeans this year."
At Chan Brothers Travel, the number of bookings to Japan in August and September has gone up 25 per cent from a year ago, said Ms Jane Chang, head of marketing and communications.
Serviced apartment group The Ascott has also seen more foreign visitors to Japan due to the weak yen and recent relaxation of visa requirements, said Mr Tan Lai Seng, the group's regional general manager for Japan and Korea.
He added that the group's Japan properties are more than 80 per cent occupied, and tourism is expected to be further boosted by the 2020 Olympics in Tokyo.
The weaker yen - coupled with low interest rates, high rental yields and a strong outlook for the property market over the next few years - is also drawing property investors, consultants say.
Mr Alex Bellingham, the Singapore-based director of property investment firm IP Global, said Japanese property is "more attractive than it has been for many years", especially ahead of the Olympics.
Economists say the yen's fall against the Singapore and US currencies is not a surprise, given Japan's monetary policy divergence with the other two nations.
"Singapore has an appreciating Singdollar policy, while Japan still favours anti-deflationary monetary and exchange rate policies," said DBS senior currency economist Philip Wee.
He expects the yen to fall further, reaching 90 yen to S$1 by the end of next year, from 85.9 yen to S$1 now.
"Markets anticipate further yen depreciation," said Oanda senior currency trader Stephen Innes. This should lead to a further fall in the Japanese unit against the Singdollar over the short term.
Credit Suisse Japan economist Takashi Shiono said the looming end of the US Federal Reserve's easy money policies has been the main factor behind the weakening of the yen against the US dollar.
But expectations of more easing from the Bank of Japan (BOJ), if Japanese economic data worsens in the coming months, will put further pressure on the yen.
"The BOJ remains entrenched in its monetary easing cycle with the potential for further initiatives still on the cards," agreed OCBC strategist Emmanuel Ng.
Companies with operations in Japan are expecting further yen fluctuations, but most have systems in place to manage the risks.
Among them is Singapore-listed Parkway Life Reit, which owns more than 40 properties in Japan.
"While we expect the yen to remain volatile in the near term, the adverse impact from its depreciation is mitigated to a large extent by (our) risk management strategies," said Mr Yong Yean Chau, chief executive of the Reit's manager Parkway Trust Management.
The Reit funded its Japanese acquisitions with yen-denominated loans, ensuring a stable net asset value, and it has also hedged its net yen cash flow for the next few years to protect its distribution income for unitholders, he added.
Other firms with Japan dealings include City Developments, which said on Monday that it tied up with a US investment firm to buy a historical site in Tokyo for 30.5 billion yen (S$355.5 million).
It was a timely purchase; a year ago the price would have translated into about S$390 million.
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This article was first published on Oct 3, 2014.
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