Abenomics Divides Japan Stocks

Japanese Prime Minister Shinzo Abe’s plan to revive the nation’s economy is leaving small companies behind. The broadest measure of equities has soared 18 percent since Oct. 31, when the Bank of Japan pledged to triple its share purchases and the $1.1 trillion public pension fund doubled its allocation to local stocks. Left in the Topix index’s wake: a gauge of startup technology and other small companies, which added 0.8 percent.

While Abe is counting on monetary easing, fiscal stimulus and reforms to put the economy on a solid footing, the measures are so far exacerbating a divide between Japan’s big exporters and the smaller firms getting no support from a weaker yen or state-financed share purchases. With the success of the premier’s plan resting on large businesses sharing the spoils with the rest of the economy, Mizuho Asset Management Co. says the stock market’s signaling transmission breakdown.

“The gap is just getting wider, and small caps are really struggling,” said Seiichiro Iwamoto, who oversees funds focusing on small and medium-sized stocks as a money manager at Mizuho Asset. “Abe’s thinking is to try make things better for the large caps first, and that’ll trickle down, but we haven’t seen it.”

Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.