Japan Elections Bring Noise

When an election is called in Japan, this is what happens: candidates with megaphones roam streets in minivans, party leaders give speeches outside Tokyo train stations, and stocks gain until polling day.

In 11 elections since 1980, the Topix (TPX) index has posted average total returns of 3.1 percent between the dissolution of parliament and the vote, according to data compiled by Bloomberg and Daiwa Securities Group Inc. Citigroup Inc. says the same will happen this time. The Topix jumped 2.7 percent last week on speculation Prime Minister Shinzo Abe would delay a planned sales-tax increase and send voters back to the polls.

Parliament will be dissolved on Nov. 21, Abe said at a press conference yesterday. The premier also ordered ministers to start preparing a stimulus package, he said. Real estate developers and financial firms will be the winners as asset prices climb, with retailers advancing amid anticipation of a pickup in spending, according to Citigroup.

Bloomberg

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