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<ul class="summary-list"><li>Luxury sales in Japan are growing despite a downturn across Asia. </li><li>Japan's currency downturn has attracted foreign tourists to take advantage of lower prices.</li></ul><a target="_blank" class="" href="https://www.businessinsider.com/lvmh-brands-iconic-luxury-goods-bernard-arnault-2019-10">LVMH</a> is the latest luxury retailer to report growth in sales in Japan, as Chinese consumers travel abroad to take advantage of cheaper luxury prices.On Tuesday, LVMH group reported a drop in profit and revenues in the first half of 2024 compared to the year before. However, sales in Japan stood out, with double-digit revenue growth.The luxury conglomerate, known for brands like <a target="_blank" class="" href="https://www.businessinsider.com/who-delphine-arnault-bernards-daughter-dior-ceo-lvmh-life-photos-2023-1">Louis Vuitton and Dior</a>, reported "exceptional growth in Japan arising in particular from purchases made by Chinese travelers.""In Japan, traffic is going through the roof," LVMH CFO Jean-Jacques Guiony said on an earnings call.And it's not the only luxury brand seeing its sales boom in Japan, thanks to Chinese tourists.<h2 id="5e24d72b-760b-473e-a5ef-fe75133f2c4d">Japan is managing to avoid a luxury downturn</h2>Earlier in July, Burberry reported its Q1 fiscal 2025 <a target="_blank" class="" href="https://www.burberryplc.com/content/dam/burberry/corporate/Investors/Results_Reports/2024/july-trading-update/Burberry%20Q1%20FY25%20Announcement.pdf.downloadasset.pdf">earnings</a>. Same-store sales in Asia Pacific were down 23%, with sales in Mainland China dropping by 21%.The one country to escape the dip was Japan, where sales grew 6%."The country's luxury industry has benefited from strong tourism from China and other near-shore customers in Asia," Burberry wrote in an earnings release.Richemont, <a target="_blank" href="https://www.businessinsider.com/cartier-van-cleef-richemont-winning-luxury-beating-lvmh-kering-2024-6">the conglomerate behind brands like Cartier</a>, and the Swatch Group — the world's biggest watchmaker — also reported strong growth in Japan compared to the rest of Asia in earnings results this month.Another luxury conglomerate, Kering, which owns brands like <a target="_blank" class="" href="https://www.businessinsider.com/gucci-sales-profit-reputation-falling-luxury-kering-michele-china-2024-5">Gucci</a>, Balenciaga, and Saint Laurent, reported a similar sales trend. In <a target="_blank" class="" href="https://www.kering.com/api/download-file/?path=Kering_Investor_Presentation_May_2024_ENG_9b999e4fd3.pdf">Kering's Q1 2024 results</a>, revenue from Japan grew 16% during the quarter, while Asia Pacific, which excludes Japan but includes China, was down 19%.<h2 id="12947fc3-47ed-417f-90ef-9d544b2b1227">Japan's weak currency is attracting tourists from the rest of Asia</h2>The yen has been <a target="_blank" class="" href="https://markets.businessinsider.com/currencies/jpy-usd?_gl=1*1tepz1s*_ga*MTEyMDk3ODA1NC4xNzE1Nzg0NTkw*_ga_E21CV80ZCZ*MTcyMTA1NTI2OC4xOTguMS4xNzIxMDU3NjE5LjQ5LjAuMA..">steadily declining in value</a> for more than three years. That means tourist dollars go further than they have for years, and luxury goods likely cost visitors less in Japan than back home.This has led <a target="_blank" class="" href="https://www.businessinsider.com/japan-weak-currency-yen-boosts-foreign-tourism-luxury-purchases-travel-2024-4">foreign tourists to flock to Japan</a> to take advantage of the low prices and snap up cheaper products from premium brands. In March, the country broke its pre-pandemic tourist record with 3.1 million visitors."Right now, the devaluation of the yen is driving a lot of tourism to Japan," Amrita Banta, managing director of luxury insights firm Agility Research &amp; Strategy, told Business Insider."Koreans, Taiwanese, Chinese, and Singaporeans are all traveling and shopping in Japan," she added, "they are enjoying bargains and shopping in Tokyo, where they know they can buy luxury goods much cheaper.<h2 id="bbbc1143-49a8-43ae-97b0-774d939a0e6b">Many luxury tourists are coming from China</h2>China has been a stronghold for luxury brands. But recently, Chinese consumers have been <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-second-quarter-gdp-growth-weak-demand-consumption-exports-2024-7">reluctant to spend their cash domestically</a>.Weak consumer spending has dragged down <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-weak-domestic-demand-factory-activity-amid-strong-export-2024-7">China's economic growth</a>. Retail sales of consumer goods expanded just 2% in June from a year ago, according to China's National Bureau of Statistics. In June, domestic sales of cars, cosmetics, and household electronics all slumped despite an increase in household disposable income.China's economy is facing a bunch of challenges, including a <a target="_blank" rel="" href="https://www.businessinsider.com/china-outlook-home-prices-slumped-beijing-property-crisis-real-estate-2024-4">real-estate crisis</a>, stock-market volatility, geopolitical headwinds, and <a target="_blank" rel="" href="https://www.businessinsider.com/china-population-birthrate-hospitals-give-up-delivering-babies-obstetrics-2024-3">demographic challenges</a>.The economic uncertainty means domestic consumers are less willing to spend on discretionary goods. Instead, they're opting to buy gold or spend their money on <a target="_blank" rel="" href="https://www.businessinsider.com/china-economy-lopsided-recovery-consumer-retail-spending-industrial-output-property-2024-5">experiences</a>.Attracted by the cheaper prices of luxury goods, <a target="_blank" class="" href="https://www.businessinsider.com/rich-chinese-millennials-solo-travel-no-kids-new-status-symbols-2024-5">China's luxury consumers</a> are spending their cash in Japan instead."Prices of luxury items in China are in many cases significantly more expensive than outside China," Daniel Langer, a professor of luxury at Pepperdine University and CEO of the luxury strategy firm Équité, told BI.So once <a target="_blank" class="" href="https://www.businessinsider.com/rich-chinese-millennials-status-symbol-solo-travel-no-group-tours-2024-6">lockdown travel restrictions were lifted</a>, "Chinese social media like <a target="_blank" href="https://www.businessinsider.com/china-instagram-killer-xiaohongshu-explained-2022-3">Xiaohongshu</a> was full of stories about the price differences between items from Hermès, Dior, and others," he added.Traveling to other destinations to buy luxury goods at lower prices is not new. Langer said that twenty to thirty years ago, Japanese luxury clients would travel to Paris and Rome and take advantage of the then-lower prices of luxury items.Now, the particularly weak yen has reversed that trend.On top of that, Japan has an incredible and growing wealth, Langer added. "There is a strong internal demand for luxury, further fueled by an influx of travelers."

Japan is fast becoming the hottest market for luxury brands

<ul class="summary-list"><li>Turmoil from the yen carry trade unwind could continue anew, according to SocGen.</li><li>Analysts pointed to Japan's central bank, which looks ready to keep raising interest rates.</li><li>A further unwinding of the yen carry trade could dent enthusiasm for US tech shares, SocGen said. </li></ul><ul class="summary-list"><li>Turmoil from the yen carry trade unwind could continue anew, according to SocGen.</li><li>Analysts pointed to Japan's central bank, which looks ready to keep raising interest rates.</li><li>A further unwinding of the yen carry trade could dent enthusiasm for US tech shares, SocGen said. </li></ul><ul class="summary-list"><li>Turmoil from the yen carry trade unwind could continue anew, according to SocGen.</li><li>Analysts pointed to Japan's central bank, which looks ready to keep raising interest rates.</li><li>A further unwinding of the yen carry trade could dent enthusiasm for US tech shares, SocGen said. </li></ul><ul class="summary-list"><li>Turmoil from the yen carry trade unwind could continue anew, according to SocGen.</li><li>Analysts pointed to Japan's central bank, which looks ready to keep raising interest rates.</li><li>A further unwinding of the yen carry trade could dent enthusiasm for US tech shares, SocGen said. </li></ul><ul class="summary-list"><li>Turmoil from the yen carry trade unwind could continue anew, according to SocGen.</li><li>Analysts pointed to Japan's central bank, which looks ready to keep raising interest rates.</li></ul>The stock market's chaotic <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-yen-carry-trade-unwind-fed-japan-rates-2024-8">yen carry trade unwind</a> that fueled the worst sell-off in two years in August may not be over, according to Societe Generale.The European bank pointed to the likelihood that Japan's central bank would continue to raise interest rates, a development that <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-selloff-today-jobs-report-recession-unemployment-tech-earnings-2024-8">rocked markets in early August</a>.Investors panicked after the Japanese central bank issued a surprise rate hike in late July. The move sparked an unwind of the yen carry-trade, a popular strategy in which investors borrowed money at ultra-low rates in Japan to deploy in other assets, like US stocks.The effects of that sell-off have subsided, with the major US indexes more than recovering their losses over the past month. But more turbulence could lay ahead as rates in Japan look poised to "normalize" after decades of deflation, according to SocGen global strategist Albert Edwards.Japan's economy is also flashing promising signs that another rate increase is in order. Wage growth in Japan just surpassed wage growth in the US for the first time in over two decades, Edwards noted.<div type="image" title="Japanese wage growth compared to US wage growth" height="668" width="1328" msid="113038359" hostid="261" sizebytes="48660"></div>"We have always exhorted our readers to watch Japan closely as it has consistently been a forerunner of major market moves," Edwards said in a note to clients on Tuesday. "Any normalisation of Japanese interest rates would have a major market impact — not just in the short term (by unwinding the yen carry trade) but also in the longer term as higher Japanese interest rates would curtail the exporting of investment flows," he later added.Some investors have already seized on that possibility, with a significant number of investors closing their short positions in the yen over the past few months. Net open interest rose in August, according to SocGen data, which indicates that most investors are no longer shorting the Japanese currency.<div type="image" title="Graph showing net open interest in the Japanese yen" height="653" width="1424" msid="113038360" hostid="261" sizebytes="31846"></div>The US economic outlook, meanwhile, looks rocky, Edwards said, which could hurt US stocks. He pointed to softness in the US labor market over the past year and declining earnings optimism in the tech sector, which has accounted for the bulk of S&amp;P 500 returns in recent years. "Might the yen carry trade still have legs? We'll need to keep a close eye on the other side of the yen carry trade, where a tech price decline can also unwind the trade. We're watching falling US tech EPS optimism closely," Edwards added.Edwards has been calling for a <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-crash-recession-sp500-gdp-inflation-unemployment-societe-generale-2024-6">recession and a stock market crash in the US for months</a>, even as many economists say that the economy generally remains on solid footing. <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-today-sp500-nasdaq-gdp-inflation-economy-rates-outlook-2024-7">GDP blew past expectations</a> for the second quarter while inflation continued to cool. Hiring, meanwhile, remains positive, with the <a target="_blank" class="" href="https://www.businessinsider.com/unemployment-rate-job-growth-july-labor-market-economic-data-2024-7">unemployment rate</a> rising, but remaining close to multi-decade lows in July.

The stock market chaos sparked by the yen last month could resume as rates rise in Japan, SocGen says

<ul class="summary-list"><li>Investors are fretting about Japan's interest-rate hike and US economic outlook.</li><li>Japan's rate hike sent Asian markets sharply lower on Monday. US stock futures are also down.</li></ul>Global markets opened on Monday on a sour note, with Japan's interest-rate hike last week hurting assets ranging from stocks to Bitcoin.Japan's benchmark <a target="_blank" class="" href="https://markets.businessinsider.com/index/nikkei_225">Nikkei 225</a> index fell as much as 8% by 1:45 p.m local time. Meanwhile, South Korea's <a target="_blank" class="" href="https://markets.businessinsider.com/index/kospi">Kospi</a> was 7% lower.Australia's <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_asx_200">ASX 200</a> was down 3.3%.Hong Kong's <a target="_blank" class="" href="https://markets.businessinsider.com/index/hang_seng">Hang Seng Index</a> was 0.9% lower while and China's <a target="_blank" class="" href="https://markets.businessinsider.com/index/csi-300">CSI 300</a> was little changed — but the Chinese stock markets have been under pressure this year due to the country's economic troubles.Investors are also on edge before the US markets open later in the global day. <a target="_blank" class="" href="https://markets.businessinsider.com/futures/s&amp;p-500-futures">S&amp;P 500 futures</a> were down 1.7% at 11:57 p.m. ET on Sunday, while <a target="_blank" class="" href="https://markets.businessinsider.com/futures/dow-futures">Dow Jones Industrial Average futures</a> were 0.8% lower. Nasdaq 100 futures were down 3.4%.<a target="_blank" class="" href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a> fell 13% over the past 24 hours.The negativity in US stocks ahead of the week's opening came after a recent <a target="_blank" class="" href="https://www.businessinsider.com/big-tech-investors-wary-high-ai-spending-markets-selloff-nasdaq-2024-7">selloff in tech stocks</a> as euphoria over artificial intelligence fizzled, with investors questioning when they would be seeing returns.A weak July jobs report from the US added to investor gloom, sparking a <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-selloff-today-jobs-report-recession-unemployment-tech-earnings-2024-8?utm_medium=ingest&amp;utm_source=markets">selloff in US stocks</a> on Friday, just days after the <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-likely-september-federal-reserve-holds-steady-july-2024-7">Federal Reserve</a> kept interest rates steady again.But it's not just the US economy and the Fed that is weighing on the markets. It's also about Japan's interest-rate hike last Wednesday.<h2 id="510f7699-0441-41e8-a3ed-cfa1d6b52dd8">Global carry trade unwinding</h2>The Bank of Japan raised its interest rate from between 0% and 0.1% to 0.25% on Wednesday — the highest level in 15 years.Even though it appears tiny, it matters because the Japanese yen has been the focus of carry trade, where traders profit from a divergence in interest rates across the world. Since the turnover in global foreign exchange markets is massive — it reached a <a target="_blank" class="" href="https://www.reuters.com/markets/us/global-fx-trading-hits-record-75-trln-day-bis-survey-2022-10-27/">record $7.5 trillion per day</a> in April 2022, according to a triennial survey — the fallout can be huge.Japan kept interest rates ultra-low for decades following the implosion of an asset bubble in the 1990s that contributed to persistent deflation. It continued holding rates low after the pandemic, in contrast to other major central banks that started hiking them.This created a divergence in monetary policy that impacted the Japanese yen, which sank to a near four-decade-low against the strong US dollar last month.This divergence helped carry trade, which, as <a target="_blank" class="" href="https://think.ing.com/articles/jpy-peeling-back-the-carry-trade-onion/">ING analysts</a> explained on Monday, has been a dominant successful investment strategy this year.It involves "borrowing cheaply in yen — on the expectation that the yen will continue to fall — and investing in some high-yielding currency or asset preferably backed by a strong macro argument," the ING analysts added.However, this strategy is now hit with a hitch, as the BOJ's rate hike last week sent the yen up — it's 7.5% higher over the last five trading days and is 1.6% lower against the dollar so far this year.The hike has also fanned further risk-off sentiment in global stock markets."The unwinding of yen shorts is undoubtedly contributing to the global risk-off environment," wrote ING analysts in a separate July 25 note.There are still be choppy waters ahead, particularly for risk assets, warned Vishnu Varathan, Mizuho Bank's chief economist of Asia excluding Japan on Friday."The dark clouds of adverse feedback loop between 'carry' liquidation and 'risk off' contagion cannot be ignored," he added.

Global markets are starting the week off on a sour note, and Japan is partly to blame

Mumbai: Indian stock markets rallied on Monday after the <keyword id="20032950" type="General" weightage="20" keywordseo="BJP-led-government" source="keywords">BJP-led government</keyword> secured a majority in the latest state elections in Maharashtra. The <keyword id="20641216" type="General" weightage="100" keywordseo="Nifty-50" source="keywords">Nifty 50</keyword> index gained more than 1.45 per cent or 346.30 points to open at 24,253.55 points, while the BSE <keyword id="19896382" type="General" weightage="20" keywordseo="Sensex" source="keywords">Sensex</keyword> index surged 1,076 points or 1.36 percent to open at 80,193.47 points. Experts noted that the election results have an impact on the markets today, and if past trends are followed, the markets may witness some rally amid the return of the BJP in the Maharashtra state elections. <keyword id="20161891" type="General" weightage="20" keywordseo="Ajay-Bagga" source="keywords">Ajay Bagga</keyword> Banking and Market Expert stated that "The just concluded elections in Maharashtra, the results of which were declared on November 23rd, will have a positive immediate impact on the stock markets. The landslide win for the BJP lead coalition in the Maharashtra state elections could lead to a short-term boost to the Indian stock markets which have been in a declining mode" He further added "Investors will interpret this mandate as favourable for the capex and infrastructure push that is ongoing in Maharashtra. The beneficiary sectors of this election are industrials, infrastructure, manufacturing, real estate and financials". In the sectoral indices on the National Stock Exchange, <keyword id="20065014" type="General" weightage="20" keywordseo="Nifty-Realty" source="keywords">Nifty Realty</keyword> and <keyword id="19941314" type="General" weightage="20" keywordseo="Nifty-PSU-Bank" source="keywords">Nifty PSU Bank</keyword> rallied with a surge of more than 2 percent, while other major indices also gained more than 1.5 per cent, including Nifty Metal, Nifty Media, and Nifty Oil &amp; Gas. In the Nifty 50 list, 49 stocks gained during the opening session, while only one stock declined. Shri Finance opened as the top gainer in the Nifty 50. The shares of the AdGroup also surged around 2 percent at the time of filing this report. <keyword id="19967296" type="General" weightage="20" keywordseo="Adani-Green" source="keywords">Adani Green</keyword> also climbed around 4 percent. "We are most likely to break the falling 20-day average that lies at 24,030, which will be the first time that'd happen since the record high of 27th September. Seasonality trends between now and the end of the year have been historically positive, with the Nifty rising 80% of the time during this period with an average return of over 4 per cent" Akshay Chinchalkar, Head of Research, Axis Securities. In other Asian markets, Japan and South Korea indices rallied. The Nikkei 225 index surged more than 1.5 percent, South Korea's Kospi also rose by 1.5 percent, Taiwan's Weighted Index was up by 0.48 percent, while Hong Kong's Hang Seng index was down marginally by 0.14 percent at the time of filing this report.

Nifty, Sensex rallied around 1.5 % after Maharashtra election results, Experts noted short term rally

<ul class="summary-list"><li>Stocks are rising after Monday's meltdown as Japan assured it will not hike rates if markets are unstable.</li><li>Some analysts say BOJ's recent rate hike triggered Monday's sell-off as traders unwind yen carry trades.</li></ul>Japan's central bank has capitulated to the markets.Just last week, the Bank of Japan hiked interest rates and struck a hawkish stance that signaled more increases ahead following years of ultra-low and even negative rates.The move, along with investors' concerns about tech and other macro themes, sent global stock markets <a target="_blank" class="" href="https://www.businessinsider.com/markets-japan-rate-hike-yen-fx-carry-trade-stock-futures-2024-8">tumbling</a> on Monday.On Wednesday, Shinichi Uchida, a deputy governor at the <a target="_blank" class="" href=" https://www.boj.or.jp/en/about/press/koen_2024/data/ko240807a1.pdf">Bank of Japan,</a> said the central would not hike interest rates when the financial and capital markets are unstable."I believe that the Bank needs to maintain monetary easing with the current policy interest rate for the time being, with developments in financial and capital markets at home and abroad being extremely volatile," said Uchida at a local event in Hokkaido.The comments were "a strong dovish signal" that played down the chances of near-term rate hikes amid such volatile markets, wrote Jim Reid, a strategist at Deutsche Bank, on Wednesday.Uchida's statement came after <a target="_blank" class="" href="https://www.businessinsider.com/markets-japan-rate-hike-yen-fx-carry-trade-stock-futures-2024-8">Monday's massive meltdown </a>in the global stock market that some analysts blamed on the Japanese central bank's rate hike last week that unraveled <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-yen-carry-trade-unwind-fed-japan-rates-2024-8#:~:text=The%20carry%20trade%20refers%20to,such%20as%20stocks%20and%20bonds.">yen carry trades.</a>This tipped global markets over the edge amid existing concerns over the US economy, cooling enthusiasm for AI, and geopolitical concerns.It's not the first time Japanese officials have sought to calm the market turmoil that sent the Nikkei to its <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-asia-nikkei-kospi-taiex-asx-recent-lows-2024-8">worst one-day percentage loss </a>since Black Monday in 1987.<a target="_blank" class="" href="https://www.reuters.com/markets/asia/japan-will-continue-monitor-analyse-financial-market-moves-finmin-says-2024-08-06/">On Tuesday,</a> Japanese officials from its finance ministry, financial regulator, and BOJ met to discuss the massive sell-off. Prime Minister Fumio Kishida himself urged calm.Uchida's dovish signal on Tuesday boosted Asian shares.Japan's benchmark <a target="_blank" class="" href="https://markets.businessinsider.com/index/nikkei_225">Nikkei 225</a> index jumped as much as 4% by 2.45 p.m. local time. Since its rebound yesterday, it has regained nearly all its losses on Monday. Meanwhile, the yen lost over 2% against the US dollar.South Korea's <a target="_blank" class="" href="https://markets.businessinsider.com/index/kospi">Kospi</a> gained as much as 2.6%, while Taiwan's Taiex closed nearly 4% higher.Australia's <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_asx_200">ASX 200</a> closed 0.3% higher.<h2 id="16922fad-d57d-4892-9b9c-bb79ac3704bf">Yen carry trade risks remain</h2>Despite the BOJ cooling attitude on rate hikes — at least for now — there are still risks associated with the yen carry trade, which could further unwind if the Fed cuts rates rapidly.The trading strategy involves borrowing cheaply in Japan's ultra-low interest rate environment and using the funds to invest in higher-yielding, such as US tech stocks, elsewhere.Nobody seems to know how much carry trade is at stake.As Macquarie's analysts wrote in a Tuesday note. "We do not profess to have all of the answers as to the breadth and depth of the unwind of the yen carry trade."<a target="_blank" class="" href="https://www.bloomberg.com/opinion/articles/2024-08-06/how-big-is-the-yen-carry-trade-really">Bloomberg</a> estimates there could be trillions at stake, pointing to potential complications. A JPMorgan strategist has said that the carry trade unwind is only <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-carry-trade-yen-boj-interest-rates-selloff-2024-8">half done.</a>It could complicate the <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-meltdown-rebound-fed-japan-interest-rate-decision-emergency-2024-8">the Fed's interest rate</a> decisions. The US central bank recently signaled that it could start cutting rates as soon as September."The natural reaction from the Fed to soft labour market data and fresh recession risks would be to cut rates and to do so relatively rapidly. But this would exacerbate any carry trade unwind," wrote analysts at GlobalData.TS Lombard in a Monday note.

Japan got so spooked by Monday's market meltdown that it's now playing cool on more interest-rate hikes

<ul class="summary-list"><li>Toyota and BMW both reported plunging profits on Wednesday.</li><li>The Japanese and German automakers have faced falling sales in China.</li></ul>China's EV giants are rising, putting foreign automakers under pressure in the world's largest car market.Toyota and BMW reported a drop in quarterly profits on Wednesday, with sales in China slumping for both companies as they face growing competition <a target="_blank" class="" href="https://www.businessinsider.com/why-byd-is-beating-tesla-ev-rivals-china-2024-11">from local automakers like BYD</a>.Toyota's profit for the quarter ending in September was 573.7 billion yen ($3.7 billion), down from nearly 1.28 trillion yen ($8.3 billion) over the same period last year.The company is grappling with a slowdown in sales in China and its home market, Japan.According to Toyota data released in October, sales in Japan plunged by nearly 17% in the first nine months of the year.In China, meanwhile, Toyota is facing fierce competition from local EV giants like BYD. Thanks to their affordable electric vehicle range, BYD has <a target="_blank" href="https://www.businessinsider.com/germany-auto-giants-volkswagen-bmw-mercedes-struggle-sales-china-evs-2024-10">rapidly taken market share from foreign firms</a>.Sales in China were down just over 10% in the first nine months of the year, with Toyota attributing the drop to "severe market conditions" such as "intensifying price competition."Luxury European carmaker BMW, meanwhile, has also found itself facing weakness in China and a high-profile recall.The German auto group said profit before tax dropped nearly 80% in the third quarter from the previous year as it reported earnings on Wednesday.BMW previously cut its financial outlook after recalling more than 1.5 million vehicles due to a braking system issue. The automaker said deliveries fell 30% in China in the third quarter.Like its German rivals Mercedes and Audi, BMW has been hit by stuttering demand for luxury vehicles in China — and it is also facing <a target="_blank" class="" href="https://www.businessinsider.com/luxury-european-carmakers-china-sales-competition-electric-vehicles-bmw-mercedes-2024-10">pressure from local rivals</a>.BYD and smartphone maker Xiaomi have made efforts to expand into the premium market. BYD launched the $150,000 Yangwang U8 SUV last year, and Xiaomi recently unveiled a <a target="_blank" class="" href="https://www.businessinsider.com/chinese-ev-xiaomi-su7-driven-by-fords-ceo-faster-model-2024-10">high-performance version of its SU7 luxury sedan</a>.Toyota and BMW did not respond to a request for comment, sent outside normal working hours.

Toyota and BMW are the latest casualties in China's evolving EV market 

<ul class="summary-list"><li>Chinese Premier Li Qiang spurred market expectations for more stimulus in a speech.</li><li>China's services activity and business confidence rose in October, boosting market sentiment.</li></ul>China is playing up its economy as the US heads to the polls in a closely watched presidential election.On Tuesday, Chinese Premier Li Qiang touted his country's economy, saying he's confident of hitting its GDP growth target of <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-two-sessions-growth-goal-challenging-economists-2024-3">around 5%</a> this year, according to <a target="_blank" class="" href="https://www.chinadaily.com.cn/a/202411/05/WS6729c795a310f1265a1cb90a.html">state media.</a>He also drummed up market expectations for more economic stimulus, saying Beijing has "ample space for fiscal policy and monetary policy."Li's remarks came just as the Purchasing Managers' Index survey from Caixin and <a target="_blank" class="" href="https://www.pmi.spglobal.com/Public/Home/PressRelease/5d38599b37f34180bcdfef3a667df95b">S&amp;P Global</a> showed October services activity in China expanded at its fastest pace in three months. Business confidence also rose to the highest level since May, the private-sector survey showed.Wang Zhe, a senior economist at Caixin Insight Group, said China's <a target="_blank" rel="" href="https://www.businessinsider.com/china-economy-aggressive-monetary-stimulus-interest-rate-rrr-2024-9?utm_medium=ingest&amp;utm_source=markets">aggressive stimulus</a> in late September has improved sentiment."The Caixin manufacturing and services PMI surveys showed that market demand stabilized and optimism improved, early signs of the new policies' impact," Wang said.Deutsche Bank analysts wrote in a note that Li's comments highlight China's "significant policy flexibility." China's services PMI survey results on Tuesday also boosted risk sentiment in the world's second-largest economy, they added.China's benchmark <a target="_blank" class="" href="https://markets.businessinsider.com/index/csi-300">CSI 300 Index</a> closed 2.5% higher, while <a target="_blank" class="" href="https://markets.businessinsider.com/index/hang_seng">Hong Kong's Hang Seng Index</a> closed 2.1% higher.<h2 id="728bb7ef-12d6-4f0a-b8fc-e67a8f141cfd">Beijing is watching the US presidential election</h2>Amid Li's show of confidence, Beijing is watching the US presidential election closely to determine its next course of action.China's Standing Committee of National People's Congress — its top legislative body — is meeting through Friday and is expected to announce fresh fiscal stimulus to prop up its economy, which has been mired in a prolonged economic downturn amid an epic property crisis."Whispers are that Beijing may have to augment the size and details of the fiscal stimulus depending on whether it is a Harris or Trump Presidency," Vishnu Varathan, Mizuho Bank's chief economist of Asia excluding Japan, wrote in a note on Friday.China's legislative body would be considering a plan to raise $1.4 trillion in extra debt over the next few years to fund a part of an economic rescue package, <a target="_blank" rel=" nofollow" class="" href="https://www.reuters.com/world/china/eyeing-us-election-china-considers-over-14-trillion-extra-debt-over-next-few-2024-10-29/">Reuters</a> reported on Tuesday, citing two sources with knowledge of the matter.Beijing is likely to roll out a bigger stimulus to buffer market volatility if Republican candidate Donald Trump wins, Varathan wrote.

China is boosting market sentiment by playing up hopes for stimulus

<ul class="summary-list"><li>The foreign exchange market remains quiet despite global geopolitical and economic shifts.</li><li>The yen carry trade unwind in August led to a temporary market pullback and recovery.</li></ul>The foreign exchange market has been eerily quiet since the yen <a target="_blank" class="" href="https://www.businessinsider.com/currency-markets-could-reshuffle-unexpectedly-fx-forex-trades-global-economy-2024-8">carry trade</a> unwind.The realized volatility in most currency pairings is incredibly low. But if you look at the backdrop of what's happening around the world, including geopolitical instability, interest-rate changes, and <a target="_blank" class="" href="https://www.businessinsider.com/9-elections-to-watch-2024-the-biggest-election-year-history-2024-1">election uncertainty</a>, <a target="_blank" class="" href="https://www.businessinsider.com/yen-carry-trade-next-unwind-forex-market-currencies-trading-fx-2024-8">FX should be going crazy</a> at this stage, says David Barrett, the CEO of EBC Financial Group, a multi-asset broker.The <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-forex">foreign exchange market</a> has three major participants, and none of them is making big moves now, he noted. The first is on the surface layer, where short-term traders are betting on currency shifts and yields, which have taken over more volume than historically. On the second layer, you have more speculative traders, mostly made up of hedge funds and trading firms. And on the third layer, you have bigger money, where the pension funds and government allocators sit.Short-term traders generally don't affect market direction as steeply. They are in-and-out traders. Much of the moves from the yen carry unwinding witnessed in August happened at this layer, Barrett said. The hedge funds or larger market makers tend to respond to flows that are coming through, making them neutrally positioned based on those flows.The last group, where the big money pension funds sit, trades foreign exchange for two main reasons: one, they allocate non-denominated currencies for their investments. Two, they hedge their currency exposure to remain neutral. They mainly readjust that hedge when currency rates move. And because we have not seen a huge amount of volatility in most pairs, they have been very quiet, he said.But the yen could once again shake up an otherwise boring currency market and more.In August, the US stock market saw a swift pullback (and recovery) after the Bank of Japan raised rates. Japan's near-zero <a target="_blank" class="" href="https://www.businessinsider.com/market-crash-japan-central-bank-boj-cools-interest-rate-hike-2024-8">interest rates </a>had made the yen a funding currency that was borrowed cheaply to invest in other assets where rates were higher — the so-called carry trade. When rates rose and the currency strengthened, the trade unwound.But what we've seen in the yen carry trade is only the beginning, Barrett said. We have flushed out the short-term positions. However, any significant move in the dollar, such as weakness due to interest rate cuts against a strengthening yen, would unravel deeper positions where pension funds sit.The big talking point in that trade is the Japanese pension fund, Barrett said. It has extensive exposure outside of Japan, and a strengthening yen is very problematic for it. Japan has the world's largest government pension fund with $1.6 trillion in assets, and a large amount of that is invested outside the country. The pension invests in foreign stocks, foreign bonds, and foreign commodities."Now, you may not think that's a yen carry trade, but it's absolutely the purest yen carry trade because all of that pension fund money started off as yen," Barrett said. "It's been sold, and it's been put into other investments abroad."The shift away from foreign asset interest has already begun. So far this year, Japanese investors bought $192 billion in Japanese government government bonds, the most in at least 14 years, according to<a target="_blank" href="https://www.bloomberg.com/news/articles/2024-10-01/japan-s-4-trillion-carry-trade-begins-to-slowly-unwind"> Bloomberg</a>. Meanwhile, they cut their foreign bond purchases by almost half, the article noted.It's hard to pinpoint an exact tipping point at which things could further unravel, Barrett noted, because positions are built on many layers. For example, hedge funds that are on the second layer that sold yen for the dollar and took positions in Big Tech, like Nvidia, are still in the money in terms of gains. Therefore, these positions may not need further shifts before they move, he noted.What's the impact of US elections on foreign exchange trades? There isn't one, he noted. This is because the race is too tight to predict an outcome at this point."So, what you tend to see at the moment is people that have existing risk that are wargaming for what happens if you get a Harris presidential victory or a Trump one," David said.The Harris trade is easier to maneuver because it's expected to be less volatile. There's a good chance that the same policies will remain in place over the first six to 12 months of her presidency. The market won't have many new adjustments to make, he noted.The potential volatility comes from the Trump trade due to tariff hikes, a fiscal boost, higher yields, and probably a stronger dollar that will benefit some sectors more than others, he noted."The trades that are being put on at the moment are probably more likely to be the longer-term guys that have ingrained exposure in their portfolio, and they're putting on some kind of hedge," Barrett said. "So most people that I talk to in the interbank market are telling me that the options market is busier than the spot market. The options market is something that gives people optionality to react rather than having to be heavily positioned."Since the market has generally been long the dollar due to higher rates, most of the options trades would be hedging against a dropping dollar by buying puts, which increase in value if the dollar declines, or doing straddles or strangles, which is when you buy calls and puts at the same or different strike prices. And because volatility in the price of FX optionality is still low, hedges are relatively cheap, he added.

As forex markets await political shocks, one tipping point could lead to a 'catastrophic trade' that unwinds markets 

<ul class="summary-list"><li>Shigeru Ishiba is set to be appointed Japan's prime minister on Tuesday.</li><li>On Friday, he narrowly won the presidency of Japan's ruling Liberal Democratic Party.</li></ul>Shigeru Ishiba, a former defense and agriculture minister, is set to become Japan's next prime minister.The 67-year-old narrowly won the presidency of the ruling Liberal Democratic Party (LDP) on Friday. He will be elected prime minister by the LDP-controlled parliament on Tuesday."Trusting in the people and speaking the truth with courage and sincerity, I will do my utmost to make this nation of Japan a safe and secure country where everyone can once again live with a smile," Ishiba said after the results were announced.Ishiba is a self-professed lone wolf who claims to read three books per day, per <a target="_blank" href="https://www.reuters.com/world/japan/shigeru-ishiba-outsider-set-lead-japan-2024-09-27/">Reuters</a>. This was his fifth try at getting the top job.His leadership is likely to transform Japan's military alliance with the US, as well as have wider implications for <a target="_blank" class="" href="https://www.businessinsider.com/this-new-us-missile-system-keeps-upsetting-china-mrc-typon-2024-9">the region's security.</a>According to <a target="_blank" class="" href="https://www.wsj.com/world/asia/japans-next-leader-shigeru-ishiba-pushes-to-remake-military-alliance-with-u-s-5da81109?mod=hp_lead_pos3">The Wall Street Journal</a>, Ishiba wants to transform what he believes to be an unbalanced military alliance with Washington.The publication noted that Japan hosts around 55,000 US troops on its territory and bears the majority of the operating costs of these bases.According to the Council on Foreign Relations, Japan has the highest number of permanently stationed US service members in the world.Ishiba has previously called for turning US bases in Japan into joint US-Japanese operations. He also wants some Japanese soldiers to be permanently based in the US, per the AP.Ishiba is a vocal defender of Taiwan's democracy and called for an Asian version of NATO earlier this month, a suggestion the US <a target="_blank" href="https://www.rt.com/news/604248-us-asian-nato-japan/">shot down</a>.Speaking to lawmakers before the runoff, he pledged to put the party's "hearts into protecting Japan, local areas, rules, and the people of Japan," per <a target="_blank" href="https://www.theguardian.com/world/2024/sep/27/japan-shigeru-ishiba-prime-minister-liberal-democratic-party">The Guardian</a>.Some of the biggest military threats he will have to contend with include China's increasing assertiveness as well as China's and North Korea's missile tests.On Wednesday, a Japanese destroyer reportedly crossed the Taiwan Strait as a countermeasure to China under the orders of his predecessor, Fumio Kishida, officials told Japan's <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://www.businessinsider.com/japan-warship-sailed-taiwan-strait-first-time-decades-officials-china-2024-9">Yomiuri</a> newspaper.That same day, China carried out its <a target="_blank" href="https://www.businessinsider.com/china-icbm-launch-into-pacific-was-first-in-44-years-2024-9">first known test</a> of an intercontinental ballistic missile (ICBM) into the Pacific Ocean in more than four decades.However, Japan's military is beset by <a target="_blank" class="" href="https://www.scmp.com/week-asia/politics/article/3270174/japan-military-hiring-hit-low-birth-rate-pay-many-reluctant-give-good-life">recruiting challenges</a> and is experiencing manpower shortages. Japan has also struggled to ramp up its domestic weapons <a target="_blank" href="https://www.voanews.com/a/japan-struggles-to-boost-defense-industry-amid-china-s-military-ambitions/7219689.html">production</a>, with <a target="_blank" href="https://www.japantimes.co.jp/commentary/2024/05/27/japan/japan-security-constitution-public-opinion/">public opinion</a> favoring the country's pacifist tradition.The US ambassador to Japan <a target="_blank" class="" href="https://x.com/USAmbJapan/status/1839555680220406257 ">posted on X</a> that he was looking forward to strengthening the US-Japan alliance.The yen rose more than 1% against the dollar after the results were announced. According to <a target="_blank" href="https://www.reuters.com/markets/currencies/dollar-drifts-risk-sensitive-currencies-lifted-by-china-optimism-2024-09-27/">Reuters</a>, the markets had been expecting the victory of hardline nationalist Sanae Takaichi.

Japan's new prime minister could try to shake up the country's military pact with the US

<ul><li><keyword id="23313190" type="General" weightage="100" keywordseo="Musashi-Seimitsu" source="keywords">Musashi Seimitsu</keyword> Industry and <keyword id="23313191" type="General" weightage="20" keywordseo="Log9-Materials" source="keywords" meta.keywordsubtype="org" meta.entityname="Log9 Materials" meta.hostid="261" meta.entityid="Log9 Materials">Log9 Materials</keyword> have announced a strategic partnership.</li><li>The two companies will produce powertrain technology and battery solutions for EVs.</li><li>The companies will offer these solutions in India and global markets.</li></ul> Japanese firm Musashi Seimitsu Industry, the parent company of Musashi India has announced a strategic partnership with Indian <keyword id="20172158" type="General" weightage="20" keywordseo="battery-technology" source="keywords">battery technology</keyword> company Log9 Materials, aimed at developing advanced electric vehicle powertrain technology and battery solutions for OEMs in the domestic and global markets. The partnership aims at combining Musashi's <keyword id="23313192" type="General" weightage="20" keywordseo="e-Axle-system" source="keywords">e-Axle system</keyword> and Log9 Materials’ battery technology to create integrated powertrain solutions tailored specifically for electric two and three-wheelers. “This partnership marks a significant milestone in our vision to reshape the electric mobility landscape. By joining forces with Log9, we are committed to delivering a comprehensive, high-performance solution tailored for <keyword id="20345883" type="General" weightage="20" keywordseo="electric-two-wheelers" source="keywords">electric two-wheelers</keyword> and three-wheelers. Our goal is to address critical market gaps and offer an integrated system that enhances energy efficiency, optimizes synergy between battery and drivetrain systems, and sets new industry standards for sustainability and innovation,” said Hiroshi Otsuka, President and Group CEO, Musashi. In June, Musashi Seimitsu’s subsidiary Musashi Auto Parts India announced that it is starting mass production of e-Axles for electric two-wheelers in the domestic market. The company said by seamlessly integrating battery packs with e-Axles, the partnership aims to reduce energy losses common in conventional powertrains, extending vehicle range and improving performance across diverse driving conditions, especially in densely populated urban areas. "By combining Musahi's expertise in manufacturing and energy-efficient motion conversion with Log9's battery technology, we aim to bring the most efficient powertrain solutions to the market. Both companies are committed to the common goal of decarbonizing the world through innovative technology, and this collaboration strengthens our aligned business ethos and future objectives," said Pankaj Sharma, Co-founder of Log9 Materials. A key aspect of this partnership is the centralized service model for the integrated battery and e-Axle systems, which will reduce repair downtime and improve customer satisfaction through quicker service turnaround, it said. Beyond India, the partnership aims to expand into global markets, including Southeast Asia and Africa, supported by a robust after-sales service network in major Indian cities. As per the company, Musashi's entry into the EV sector aligns with its strategic goals of fostering innovation and contributing to global carbon emission reduction efforts. With inputs from PTI. SEE ALSO: <a href="https://www.businessinsider.in/entertainment/news/it-is-cheaper-to-watch-coldplay-perform-in-abu-dhabi-than-to-pay-scalpers-for-mumbai-tickets/articleshow/113665893.cms">It is cheaper to watch Coldplay perform in Abu Dhabi than to pay scalpers for Mumbai tickets</a> <a href="https://www.businessinsider.in/business/auto/news/hyundai-motor-indias-25000-crore-ipo-gets-sebi-approval-indias-biggest-ipo-expected-to-launch-in-october/articleshow/113658837.cms">Hyundai Motor India’s ₹25,000 crore IPO gets SEBI approval – India’s biggest IPO expected to launch in October</a> <a href="https://www.businessinsider.in/business/auto/news/tata-nexon-ev-with-a-bigger-battery-launched-starting-at-13-99-lakh/articleshow/113631992.cms">Tata Nexon EV with a bigger battery launched starting at ₹13.99 lakh</a>

You Searched For "japan market" and got 10 results

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