Japanese retail traders have turned bullish on the yen for the first time in 2-1/2 years. As David Pollard reports, there are growing concerns about Abenomics and the state of Japan's economy.
Japan's share prices make grim reading. The Nikkei at levels where the bears say the only way is down. The yen, meanwhile, at 15-month highs. The Bank of Japan's move to negative rates 2 weeks ago was seen then as a bold bid to lower the currency and boost asset prices. With exactly the opposite happening, governor Kuroda could be surplus to requirements, according to CLSA's Nicholas Smith. (SOUNDBITE) (English) CLSA JAPAN STRATEGIC RESEARCHER, NICHOLAS SMITH, SAYING: "The best thing to do with Kuroda at the moment is buy him a set of flights, a holiday to a beach of his choice and say "Don't come back for a year". It would be best if the Bank of Japan isn't acting from here on." Japan's Abenomics are named after prime minister Shinzo Abe. Two of its three so-called 'arrows' - monetary and fiscal stimulus on a massive scale - boosted the Nikkei by nearly 60 per cent in their first year. The third arrow of structural reform has, it's claimed, barely begun. And in the meantime, the BoJ is failing to push inflation anywhere near target. But not all has been in vain, according to CEBR's Vicky Pryce. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "What would have happened if we hadn't had Abenomics? It's really similar to what happens here with quantitative easing in Europe and the US. It's the counterfactual as we economists call it - in other words, things would have been much worse." London Capital Group's Brenda Kelly says it still could get worse. (SOUNDBITE) (English) HEAD ANALYST, LONDON CAPITAL GROUP, BRENDA KELLY, SAYING: "With the trend very much to the downside, there are still concerns that no matter what the Bank of Japan actually tries to do, it will still be struggling, and we are still expecting to see this quarter contract once again." If growth does contract, it will be negative for the fifth time in the last nine quarters. The smiles here on the Nikkei trading floor doing little to mask deep concerns.