Investors appear unimpressed with Japan’s new leader. The ruling party has chosen Fumio Kishida to replace Yoshihide Suga as the head of the world’s third-biggest economy. Kishida was the continuity candidate.
That means more loose fiscal and monetary policy, “decarbonisation, digitalisation” and the “promotion of free trade”, says Ma Tieying of DBS. The new government is preparing to launch yet another stimulus package, worth at least 5.5% of GDP. Happily, Covid-19 is back under control in Japan, with vaccination rates now exceeding those in the US. Japanese stocks rallied in September when Suga announced his resignation, say Toshiro Hasegawa and Gearoid Reidy on Bloomberg. There was hope that Japan could turn the page on a difficult year. It is a measure of just how “uninspiring” investors find Kishida that the benchmark Topix index has since given back all of their post-Suga gains.
Kishida has got off to a bad start with investors, say Leo Lewis and Kana Inagaki in the Financial Times. This week he suggested that he could increase Japan’s capital-gains tax. The resulting selloff, dubbed the “Kishida shock”, sent the Topix down by 3% on Tuesday. Higher taxes would mark a “sharp reversal” from the pro-investment line taken by Tokyo since 2013.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Japanese investors aren’t that gloomy, say Hideyuki Sano and Tom Westbrook on Reuters. The country’s shares outperformed both the US and Europe last month. A better Covid-19 picture and improved corporate earnings outlook also bode well. Supporters view Kishida as “a steady consensus-builder”, but many doubt he can see through overdue structural changes to Japan’s “old-fashioned” bureaucracy. He will face the voters in a general election at the end of this month.
-
M&S and Tesco among those warning of a £7bn Budget hitSeventy-nine UK retailers have written to Chancellor Rachel Reeves about possible price rises and job cuts - here is what it means
-
How much does it cost to move home under the Labour government?Home-moving costs are rising and could get more expensive once stamp duty thresholds drop in April 2025
-
Investing in a dangerous world: key takeaways from the MoneyWeek SummitIf you couldn’t get a ticket to MoneyWeek’s summit, here’s an overview of what you missed
-
DCC: a top-notch company going cheapDCC has a stellar long-term record and promising prospects. It has been unfairly marked down
-
How investors can use options to navigate a turbulent worldExplainer Options can be a useful solution for investors to protect and grow their wealth in volatile times.
-
Japan enters an era of political instabilityThe result of the general election in Japan has thrown the country into uncertain times, politically
-
Invest in Hilton Foods: a tasty UK food supplierHilton Foods is a keenly priced opportunity in an unglamorous sector
-
HSBC stocks jump – is its cost-cutting plan already paying off?HSBC's reorganisation has left questions unanswered, but otherwise the banking sector is in robust health
-
Lock in an 11% yield with SabreTips Sabre, a best-in-class company is undervalued due to low profits in the motor insurance industry. Should you invest?
-
Byju’s – the startling rise and fallIndia’s educational technology start-up Byju's attracted big-name backers and soared to vertiginous heights during Covid. It has now plummeted. What happened?
