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The Japanese Prime Minister, Shinzo Abe, surprisingly announced that he wanted download after his health deteriorates, he will remain in office for the time being at least until the Liberal Democratic Party finds a successor. There download the prime minister will involve some Consequences also in markets?
Already from the first after the news spread, theNikkei 225 index locked 1.4% drop, while the Topix registered a 0.7% discount. After confirming the news yen rose, attesting to 105.47 against the dollar.
Shinzo Abe’s economic policies
Since 2012, the Japanese prime minister has wanted revive the economy of the country through a defined economic maneuver “Abenomics“, which was capable of a new boost to employment ending 20 years of deflation that have hit Japan. Now analysts expect past policies at Abe to continue, as confirmed by Peter McCallum, rate strategist at Mizuho International, on CNBC:
“The Economic and Monetary Policy Framework (of the Bank of Japan) will remain probably unchanged even though PM Abe gave the green light. Let’s see some advantage for the Nikkei 225, but we do not recommend of sell securities based on this news, even if Japanese government bonds could remain weak at least until a new prime minister takes office. “
Meanwhile, the The US dollar decreased 0.6% versus a basket of currencies, as a result of lower interest rates for states after Abe’s announcement. Robert Carnell, ING’s regional head of research for Asia Pacific, added that there is still a lot to do to take back Japan after the economic collapse suffered as a result of the pandemic, and the news of the resignation of the prime minister did not facilitate this situation.
Carnell further specified that the economic policy Based on substantial fiscal and monetary support, it may not have met its objectives, but it has also not been a failure given Japan’s progress under Abe’s leadership. Policies that, however, have suffered much criticism, some experts claim in fact that the prime minister could not bring lasting changes in the Japanese economy, already burdened by low productivity and an aging population.
Possible future scenarios
As early as 2007 the Japanese prime minister had announced his own resignation and what is feared now after the news of his abandonment is spread is real race for leadership from the moment his successor remains in office until the end of his term. Martin Schulz, chief economist at the Fujitsu Research Institute, said:
“We don’t know who will succeed Mr. Abe in September, so clearly politics is still up in the air. But what we do know is that type of economy we have had, with a very strong quantitative monetary easing, with a relaxed fiscal policy with small and brave micro reforms they will continue almost with one 100% chance”.
According to analysts, therefore, it does not appear that structural reforms will be implemented, and it is very likely that there will be a continuation in the same direction as Abe.
The consequences in Asian markets
The resignation of the Japanese prime minister seems to have had consequences for everyone else as well Asian markets: the Kospi index of the South Korea the Hang Seng index says Hong Kong They closed a little higher. Even the Chinese stocks reported growth, the Shanghai Composite rose 1.6%, while the Shenzhen Composite gained 2%.
the successor the prime minister will be elected in theinside the PLD party, like Abe, and therefore it is easy to assume that there will be no change of course from the past, and thanks to a weak and fragmented opposition, Abe’s successor should be able to win with extreme ease during the next election.
