Japanese stock markets reacted poorly to the victory of Abe

Abe JapanThe major Japanese stock indexes reported slight changes in today’s session after Prime Minister Shinzo Abe received a vote of confidence in its economic policy, known as “Abenomika”. Justifying mass estimates, led by Abe’s Liberal Democratic Party won a majority in the upper house of parliament in Sunday’s election, according to preliminary results. Once in early trade advanced 1.2%, the benchmark Nikkei 225 stock average sank profit to 0.5%. The analysts attribute this development of the stock market likely victory of the ruling party had already been calculated in the share price and trading strategies. Since he assumed the premiership at the end of last year, Abe made policies to overcome deflation in Japan and to accelerate growth.
“We have won public support for a strong and stable policy so that you are able to pursue its economic goals and will ensure that we fulfill the expectations”, said Abe to Japanese public broadcaster NHK, after the media announced that the Liberal and coalition their partner have won the required majority. The analysts note that Abe can now start implementing painful economic reforms relating to the “third dart” of planned policies, the first two are weak monetary policy and government spending.
“This increases the expectation that the laws will be voted lighter and he could focus on the revitalization of the economy”, said Takuya Takahashi of Daiwa Securities. Takahashi added that foreign investors have reacted positively to the prospect of a stable first Japanese government since 2006. “The probability that there will be a general election in the next 3 years is greater”, he said. “What we are looking for investors, stable government, they watch how Abe will deal with deflation”, said the analyst. In recent years, Japan has experienced serious political turmoil because of the stalemate in parliament where opposition controlled upper house. Until Abe policies have been well received by investors since the beginning of the year, the Nikkei 225 rose by about 40%. the JPY even fell by 15%, making exports more profitable.Analysts say that the profits of the Nikkei 225 will continue to grow will depend on the course of the ongoing structural reforms.

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