Dark clouds await

Recent data from Japan suggest that the world’s second biggest economy is finally tipping into recession. The Cabinet Office revealed on Wednesday that the economy had shrunk by an annualised 2.4 per cent during the first quarter of the financial year. Worse still, Japan’s terms of trade — the income gained on a given volume of imports and exports — are falling at their fastest pace in 28 years. Below provides some insight what Fund Managers think would likely be the future economic direction for Japan and the world economy.

IStockAnalyst: Expectations for a recession in Japan have increased, a monthly fund manager survey by Merrill Lynch showed Wednesday. In the August survey, a net 46 pct of 35 fund managers for Japan said that the country is likely to experience a recession in the next 12 months, up sharply from 6 pct in July. A net 57 pct expect the Japanese economy to weaken in the coming 12 months, up from 52 pct in the July survey. Corporate earnings are also widely expected to deteriorate, with a net 57 pct thinking that earnings-per-share growth at Japanese companies will decline over the next 12 months, up from 38 pct in July. Meanwhile, inflation expectations came down. In August, a net 54 pct of the fund managers said that Japan's consumer price index will rise over the 12 months, but the proportion is down from 77 pct in the previous month. The survey also showed that a net 18 pct of global fund managers expect global core inflation will be lower in the coming 12 months. Two months ago in June, a net 33 pct said inflation would be higher. David Bowers, an independent consultant to Merrill Lynch, called this "an extraordinary change of view in inflation." The change in the fund mangers' view of inflation appears to be generally reflecting dim prospects for the world economy. For instance, 24 pct of the global fund managers said in the August survey that a recession is already at hand. Still, they might have overreacted to the recent fall in oil prices. Karen Olney, head of Merrill Lynch's European equity strategy, said, "It will take several months of slowing global growth to be sure that the inflationary dragon has been slain."

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* 2 winning games away to have a million ringgit in his pocket?

* Vietnam has slashed retail petrol prices up to 5.3%. The cut came 3 weeks after Hanoi unexpectedly raised fuel prices by as much as 36% in July. Why do we have to wait till September for the cut? Singapore has revised petrol prices downward for the 5th time?

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* A total of RM37m of windfall levy (1st instalment) was paid by the IPP companies to the Government yesterday. Payment under protest?