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Posts Tagged ‘Upper House elections

Abenomics is a vote-winner

Buy on the promise, sell on the news? That may be the initial temptation of those of us who have been happily playing the Japanese recovery story for the last few months, now that Mr Abe’s Liberal Democratic Party has won a resounding victory in the Upper House elections at the weekend. The result means that with a comfortable majority in both chambers, the flag-waving Prime Minister is well placed to push through his programme of economic reforms, aided by the expansionary monetary policies now being embraced by the Bank of Japan. Despite the size of his majority, some will worry that the impetus to complete the much-needed structural reforms – the so-called third arrow of Mr Abe’s strategy – will weaken now that the election is over. The LDP traditionally represents many of the powerful vested interests that have killed reform agendas so many times in the last 20 years; could they do so again?

It is possible, but my instinct is that answer will be no. The Japanese equity market retains its attractions. The key insight that the professional investors I talk to keep bringing back from Japan is that for the first time in living memory all the interested parties – the government, the central bank, companies and now the electorate – are all aligned in the same direction, prepared to give Abenomics its head. The programme is certainly not without its risks, and it  has important implications for investors in other countries around the globe, as Henry Maxey, the CEO of Ruffer LLP, points out in its latest investment reviewRead the rest of this entry »

Written by Jonathan Davis

July 22, 2013 at 11:46 AM