Japan

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

 Japan's Eifuku Investment Management has liquidated its Tokyo-based
hedge fund after it plunged 98 per cent ($300 million assets)  in seven
trading days, the fund's manager told investors.







Japanese rates in 'one-off' fall below zero - Financial Times
By Mariko Sanchanta in Tokyo  Jan. 24, 2003
Japan ventured into uncharted territory on Friday as overnight call
rates fell below zero for the first time in the country's history.
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The overnight call rate on Y15bn of funds traded between foreign banks
fell to minus 0.01 per cent. Because of the negative rate, borrowers are
in effect being paid for borrowing funds because they will have to pay
back less than they were lent.
With long-term interest rates already virtually nil under the Bank of
Japan's "quantitative easing" policy, bankers said on Friday the move
into negative territory was more a symbol of the country's decade-long
economic malaise rather than an indicator of future financial chaos.
The situation, said bankers, was likely to be a one-off and pointed out
to the relatively small size of the transaction.
Critics say that the BoJ's ongoing zero interest rate policy and it
decision to flood the market with liquidity has been ineffective in
stimulating the economy.
"In terms of monetary policy, the BoJ is not doing enough," said Hisashi
Sitow, director at Credit Suisse First Boston in Tokyo. "It has to buy
more JGBs or foreign bonds to affect the market. Monetary policy is
clearly ineffective, as base money is increasing but growth in the money
supply is stagnant."
Current record low yields on Japanese government bonds indicate that
investors are not betting on an economic rebound anytime soon. The
10-year JGB has been skirting new four-year lows for some weeks, while
the yield on the five-year bond fell to a record low on Friday.
"This is all part and parcel of a growing loss of faith in Japan's
future," said Marshall Gittler, strategist at Deutsche Bank in Tokyo.
"JGB movements are telling a story that deflation is set to continue
indefinitely."