Economy and Prime Minister Boost Japan’s Stocks

Japanese Prime Minister Shinzo Abe delivers a speech on Japan's economy and investment-friendly reforms at New York Stock Exchange in Manhattan, New York, U.S., September 20, 2017. REUTERS/Amr Alfiky

The Japanese stock market, represented by the Nikkei 25 Index, has recently surpassed its highest levels since the early 90’s. The current surge has broken the market’s long-term drought on reports of strong earnings and the reelection of the country’s prime minister.

2017 Highlights

So far this year, both the Nikkei 225 and MSCI Japan index are up by a significant margin – 19.5% for the Nikkei 225 and 18.4% for the MSCI Japan index.

Experts are attributing Japan’s stellar yearly performance to a stronger economy spurred on by its Prime Minister, Shinzo Abe, who was just elected again for another term.

Long Overdue

For almost 25 years Japan has not been able to break out of its slump. Ever since the Japan Stock Market bubble burst in the early 90’s, it could not regain its former glory. Sure, it had many quasi-breakthroughs but those were only short-lived and the drop thereafter was more significant than the gains – longer lasting too!

Strong Foundation Supports New Rise

This time it seems to be different though. Instead of a momentary state of euphoric buying, the Japanese Stock Market seems to be rising on strong proof of economic growth.

The most recent government data showed that the country’s economy was growing at a breakneck 2.5% during the past 3-months (as of September 30, 2017).

This was a record 7-straight quarters of growth for Japan who has not seen such consistent growth levels since the last century.

If the economy continues to keep pace with its most recent results, it should attract more international investors who so far have seen the country’s stock market in the past quarter of a century as a great “shorting” vehicle instead of a buying opportunity.

Maturing Economy

Shinzo Abe and his economic policies have finally revived this former economic powerhouse known as Japan and increased its nominal Gross Domestic Product (GDP) levels to record numbers – a feat that has not been accomplished in any one year during the past 20 years.

This should be no surprise though, as a maturing economy always comes with maturing leaders, and in Japan’s case one maturing leader – Shinzo Abe.

Longest Reign

The stability and growth of Japan’s economy and its stock market is a direct result of the country’s political stability over the past decade. In particular, the Prime Minister is set to become the longest government servant in the country’s parliamentary system’s history, which began way back in the 1880’s.

During his tenure as the Japanese Prime Minister, Shinzo Abe has made it a point to stimulate the country’s economy by solid principles and not by short-lived tactics like mass immigration.

It has taken some time for the country to turn the economic tide, and along with it its stock market, but as long as Shinzo Abe and the country’s big businesses continue to follow a sound economic plan there should be nothing but good news coming from the country’s economy and share market.


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