The eyes of the operators in these hours are focused on Japan. The surprise resignation of the premier, Shinzo Abe, due to the deterioration of his health conditions caused the stock exchange of the third largest economy in the world to retreat with an initial collapse and a subsequent comeback that limited the losses to 1.4% for the Nikkei index. Sales were driven by uncertainty about the country’s future.
“My current state of health, following the recent checks, does not allow me to focus on the most important issues concerning the government, and this is why I intend to step aside,” the premier said during a news conference broadcast. live from the Japanese networks.
Abe’s resignation ends an eight-year term during which the premier ensured political stability, strengthened his international presence and introduced a series of constructive economic and social reforms known as Abenomics.
What will happen now? “Since the beginning of his tenure, we have viewed Abe’s reform program as positive, especially since it has been adopted with a wide level of approval, offering stability and clarity to investors – comment the analysts of T. Rowe Price, global asset manager. founded in 1937 in the USA -. We believe that, despite his resignation, Abe will remain influential in Japanese politics and the LDP party, an important element in terms of continuity. We do not expect large changes in the positive and popular aspects of Abe’s market reforms and in the policies of the LDP party. His successor will most likely be one of his closest allies within the party and will continue to carry out the general principles of his constructive policy. Even if we have no idea who Abe’s successor might be, we have no evidence of confirmation at this stage ».
The view of the house on Japanese equities is positive, especially if the path of structural and economic improvements continues. With Japanese companies showing little or no net debt and improving governance, and despite corporate profits being put under pressure, Japan offers a very different set of characteristics than US equities, which led the strong rally in the market. stock market in recent months. “As the next phase of the equity cycle approaches and the next evolution of domestic and international political governance approaches, we continue to believe that Japan represents an attractive opportunity for active management, given its positive and little-beaten dynamics of change by investors” analysts say.
Masaki Taketsume, Fund Manager, Japanese Equities, of Schroders, also shows confidence: «We believe that there will probably be continuity in both fiscal and monetary policy. We would also like to highlight Japan’s response to the Covid-19 crisis, which has been relatively more successful than other developed economies. Meanwhile, Japanese companies have solid balance sheets that make them well positioned to face the global crisis ». The stock market? “We believe that Abe’s resignation should not distract investors from other positive factors, such as the containment of the virus in Japan and improvements in areas such as corporate governance – says the expert -. And although Japan has handled the virus better than many other countries, in our opinion this is still not reflected in share prices.