China-Japan spat impacts rand
News reports of escalating tensions between China and Japan send the rand and bonds weaker.
By Helmo Preuss
News reports of escalating tensions between China and Japan sent the rand and bonds weaker in mid-morning trade on Friday after initial euphoria on the announcement of a monthly $40bn quantitative easing (QE3) bond-buying programme by the US Federal Reserve on Thursday evening.
At 10.29am the JSE all share index was at 36‚473.73 after earlier hitting a record high of 36‚554.09 from Thursday’s close of 35‚885.23.
The rand was bid at R8.2615 per dollar from Friday morning’s best level of 8.1781 and Thursday’s worst level of R8.4446 and Thursday’s close of R8.2365‚ while the R157 bond yield was trading at 5.490% from an early morning best level of 5.400% and Thursday’s close of 5.480%.
The gold price was at US$1‚770.07 an ounce from Thursday’s close of $1‚769.37 after reaching an intraday high of $1‚777.95.
“We have seen a rapid reversal of sentiment as both China and Japan are important to us and the world economy‚” a local bond trader said.
An analysis of SA’s foreign trade with its non-Southern African Customs Union (non-SACU) trading partners showed that exports to Asia have almost quadrupled from R63.5bn in 2003 to R250.6bn in 2011.
Exports to Europe by contrast grew by only 96.4% over the same period to R181bn. Exports to the rest of Africa grew by 182% to R108.4bn. This meant that exports to Asia accounted for 35.4% of total exports in 2011 from 23.3% in 2003‚ while exports to Europe dropped from a 33.7% share in 2003 to 25.6% in 2011. The rest of Africa’s share went from 14.1% to 15.3%.
This makes sense in terms of export strategy as Asia‚ especially China and India‚ have been growing far faster than Europe.
In 2011‚ exports to Asia grew by 27.1% from 2010‚ while exports to Europe only increased by 12.4%‚ while total exports grew by 19.9%.
Dow Jones Newswires reported that Japan has warned its citizens in China about safety after six "serious" cases of assault or harassment that came amid rising tensions between the two countries over the disputed East China Sea islands‚ a Japanese diplomat said on Friday.
The incidents in the financial hub of Shanghai followed the Japanese government's announcement of the completion of its purchase of the disputed islands‚ which it administers and calls Senkaku‚ but which China claims as Diaoyu.
The Japanese government issued its warning on Thursday and detailed some of the cases reported in Shanghai‚ home to more than 60‚000 Japanese citizens‚ said the diplomat‚ who asked not to be identified.
China and Japan are Asia's two biggest economies‚ with close trade and business ties. Their political relationship‚ however‚ is often tense due to the territorial dispute and Chinese resentment over historical issues.
In one case of violence‚ a group of Japanese having a late dinner was attacked though no one was seriously injured‚ the Japanese consulate in Shanghai said in a statement posted on its website.
The Shanghai Daily newspaper said the Japanese involved in that "scuffle”‚ which took place Tuesday‚ were participants in an international nine-ball pool competition.
Japanese players in the tournament have been requested to stay indoors‚ the newspaper quoted an organiser as saying.
Other cases included Japanese nationals being kicked‚ hit by bottles or having drinks poured on them‚ the consulate said. In one case‚ a Chinese man on a bike tried to force a taxi driver not to take a Japanese passenger.
In two of the incidents‚ the assailants asked‚ "Are you Japanese?" before acting‚ but it was not known how the victims responded‚ while in other cases those attacked were overheard speaking Japanese‚ the diplomat said.
"The Japanese government has repeatedly asked the Chinese government to ensure the safety of Japanese nationals and companies‚" the consulate said in the statement. "But we ask that you take full precautionary measures to ensure your safety."
Such measures include refraining from speaking Japanese in public places‚ said the diplomat.
Tensions have risen between the two countries over other incidents in the past. In 2005‚ violent demonstrations took place in several cities over a slew of grievances including the atrocities committed by Japan in China during World War II.
Numerous Japanese companies invest in China and two-way trade totalled $342.9 billion last year‚ making Japan China's fourth-largest trade partner‚ according to Chinese official data.
The wife of a Japanese businessman in Shanghai‚ who moved to the city six months ago‚ said the community was growing more fearful especially with the rumours of further anti-Japan demonstrations in China.
"More and more people are scared‚" she said. "I guess some people will leave [China]."
More than 20 cities have seen anti-Japanese protests in the past month - in Beijing‚ the car of the Japanese ambassador to China had its flag ripped off by a man.
On Thursday‚ hundreds of protesters gathered outside the Japanese embassy in the Chinese capital‚ singing the Chinese national anthem and waving flags‚ to condemn Tokyo's purchase of the islands.
Six Chinese ships sailed into waters around a disputed archipelago on Friday‚ with Beijing saying they were there for "law enforcement" around islands Japan nationalised earlier this week.
Japanese diplomatic missions have warned more protests are possible on September 18‚ the anniversary of the "Mukden Incident" in 1931‚ which led to Japan's invasion of Manchuria in northern China.