MNI INSIGHT: BOJ Concern Over Tankan Business Plan Distortions

By Hiroshi Inoue

     TOKYO (MNI) - Bank of Japan officials are hesitant to place too much

importance on the headline June Tankan outcome, as continued high uncertainty

both at home and abroad is making it difficult for firms to lay out their full

year business plans and many may leave certain survey questions unanswered, MNI

understands.

     The BOJ will back-validate blank spaces in the June survey with answers on

business plans last provided by respondents, be that in the March or earlier

surveys.

     With many, if not all, companies having better-looking forecasts in surveys

before the Covid-19 pandemic struck, economists at the bank are warning that the

diffusion indexes in June will likely paint a far more optimistic outlook than

is the reality.

     --SENTIMENT LOWER

     Business sentiment is widely expected to worsen from three months ago as

the greatest impacts of the virus spread were felt in Q2.

     Around half of Japan's listed companies didn't announce business plans for

the upcoming fiscal year when announcing their latest earning results, and the

BOJ thinks it questionable whether these firms will respond to the BOJ Tankan

survey questions.

     The BOJ will release the June Tankan survey results at 0850JST on July 1

(2350GMT June 30). The response rate to the March survey was very high at 99.0%

and bank officials expect a similarly high reply rate this month, although there

is a feeling the reply rate to all questions will be lower

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

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