“Is Japans stock market decline this week merely a reflection of Wall Street or is it portending a failure of Abenomics. Is Japan once more going to seize defeat from the jaws of victory!”
Well said and I think part of the answer is that too many investors have been disappointed by Japan for too long.
I have been saying, mainly in the Audios, that there is enough uncertainty over the April sales tax increase and a stall in the yen’s devaluation to curb interest from international investors. Japan’s stock market had a bad January from which it only partially recovered. Also, it began to weaken earlier this month when USD/JPY fell from above ¥104 to back beneath ¥102. I think Wall Street’s recent slide is also an influence on Japanese equities. I mentioned in last night’s Audio that a move beneath lateral support near 14,000 since last November by the Nikkei Index (weekly & daily) would further reduce confidence unless quickly reversed.
Yes, ‘Abenomics’ has lost some support, not least because the Prime Minister would like to restart some of Japan’s nuclear power stations to lower energy costs. Public opinion is not yet ready to accept this. However, I do not think that Japan is ready to give up on ‘Abenomics’ and although stock markets are volatile, I would not want to sell Japanese equities in a global sell-off, not least as the accommodative monetary policies, including low interest rates, will continue in developed countries.
See also the article immediately below on Abe’s Nippon Individual Savings Account programme of tax breaks for Japanese investors on share gains, introduced on January 1st. Temporarily, the government may even be happy to see the current softness in Japan’s stock market as this will enable additional Japanese citizens to re-enter the stock market at somewhat more attractive levels.Back to top