Japan's Curtin

Don't be fooled by the major bounce in the Japanese sharemarket, Economics New Zealand managing director Donal Curtin says. It's all a hoax.

In the past month the Nikkei 225 index has run up more than 20% from the 9400 mark to nearly 12,000.

Curtin says this run up has been "deliberately engineered" by the Government.

He says the Japan is a "deeply misleading market" at the moment because of the manipulation around short selling in the market.

In his view it is a classic rort to help companies make their balance sheets look healthier than they really are. Because the market has run up so much companies which have listed companies as assets on their balance sheets will look to be in better shape than they are.

"It makes them less dead than they really are," he says.

Curtin says many companies in Japan "are on the life support machine, but nobody will turn them off."

"The funeral bill has yet to be paid."

The worst sectors are banking, insurance, real estate and construction.

Curtin says Japan is also suffering from a severe case of 'enronitis' as many of the companies have all sorts of off-balance sheet items that are not accounted for in consolidated reports.

This makes the corporate situation in Japan even worse than it appears.

While the market has bounced nothing fundamentally has changed in Japan to help the economy.

Curtin's view on the Japanese economy is that it bad and worsening.

"I just wouldn't have a bar of the story that Japan is improving."

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