3 Ways Japan Could Win From Lower Crude Oil Prices
Falling oil prices have wreaked havoc on producing nations like Russia and Nigeria, but importing nation Japan has seen crude’s recent slide as an opportunity to boost sales and get its economy back on track. Three such Japanese sectors set to benefit are explored below.
1. Auto Industry
Japanese auto maker Toyota Motor Corp (ADR) (NYSE: TM) had a record-breaking year in 2014 and is expecting the bright spot to continue through 2015.
While lower oil prices have helped automakers across the board, other Japanese firms that depend on oil to manufacture their products are also seeing a lift.
Manufacturers like Kawasaki Heavy Industries Ltd (ADR) (OTC: KWHIY) also stand to benefit as the weak oil prices have balanced out the effect a weaker yen has had on the cost of imports. With the yen down around 118, the cost to import raw materials for manufacturing has skyrocketed, but deteriorating oil prices help offset some of those costs.
Retailers like Kao Corporation are also looking to gain as companies’ savings are passed on to employees. Prime Minister Shinzo Abe has been calling for Japanese firms to raise wages, something he says is essential to spur on consumer spending.
In addition to savings from reduced crude import prices, Japanese firms are set to receive a corporate tax reduction in the coming months, something Abe has urged companies to pass on to their employees. The Abe administration recently reported that the "trickle-down effect" will theoretically boost the whole economy.
Image credit: OiMax, Flickr
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