Abenomics takes new turn

10 September, AtoZForex.com, Lagos – The share average of Japan’s Nikkei surged after Prime minister Shinzo Abe’s comments triggered hopes of more policy steps to aid growth and as long-term investors went for bargain after the market hit a seven-month low. Japan’s Nikkei rose 5.6 percent to 18,390.26 in early afternoon trade on Wednesday after falling below 17,450.77 in the previous session, the level last year’s index ended at.

Prime minister Shinzo Abe, said in an investors meeting that he would seek to edge down corporate tax and he appears optimistic in sealing a trans-pacific deal, a new way for abenomics? The Prime minister’s comment further boosted the market players that are closely watching, as it is seen by investors to be an added boost to Japanese stocks as they surged from Tuesday’s overselling, aided by overnight gains on wall street.

Rebooting of Abenomics?

Norihiro Fajito, senior investment strategist at mitsubishi UFJ securities said, “Abe’s speech sparked speculation that he Won’t be sitting idly to let the economy flop. Investors thought there will be rebooting of Abenomics”.

Amidst Abe’s fiscal policies which are yet to translate into gains in real wages for Japanese workers, Market players opines that easing the corporate tax burden is a step gearing towards giving companies more profits to put into employee’s pockets.

“There is also a sense of relief at seeing Abe turn his attention back to the economy after putting so much of his focus towards a controversial security bill,” said Nicholas Smith, a strategist at CLSA.

Opportunity for Bargain-hunting

The Nikkei’s dip to a seven-month low on Tuesday is also seen by the long-term investors as a good opportunity for bargain-hunting as the Nikkei was trading around 14 times forecast earnings. The Nikkei is on course to pose the biggest daily gain since March 16, 2011, if the gains hold. Market players said that Japan’s market tends to be volatile as it is the most liquid market open during Asia trade. Investors will trade on Japanese shares to hedge against the fall in China, if the Chinese market falls.

There was a surge in Brokerage stocks, with Nomura Holdings up 7.3 percent and Daiwa securities Group rising 5.8 percent respectively.

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