The Coming Week in Asia: Head-Scratchin' Over Tokyo Stocks' Woes

TOKYO -- It has only been about four months since Yoshiro Mori took the helm as Japan's prime minister, and yet, during this short period, nothing seems to have gone his way.

Only days after government officials hailed the recent Group of Eight summit as an overwhelming success, citizens blasted the premier for spending a whopping 81 billion yen ($743 million) on the venue. (That's almost a hundred times more than what Germany or the UK spent on their summits.) The image of Japan as the maker of top-quality products is diminishing quickly too, thanks to a string of safety-control scandals at numerous automakers and food and beverage concerns. And not only that, Mori's verbal gaffes are so abundant, the newspapers have taken to printing only the juicier ones.

The show must go on, however, and perhaps the most pressing issue Mori needs to tackle is finance. Sure, investors stampeded back into Japan's stock market last year, driving the key Nikkei 225 index up by nearly 37%, as they figured the economy could not get any worse. In part, they were right. The Economic Planning Agency's latest data on consumer spending proved upbeat, rising for two straight quarters, business sentiment is improving, and the central bank is even thinking about raising interest rates because they think the worst is over. ...