Abe Unveils Third Arrow Hopes to Boost Stock Market

The government of Prime Minister Shinzo Abe unveiled on Monday new policy measures it believes would benefit investors and companies, such as cutting Japan’s relatively heavy corporate tax rate, with the aim of bolstering share prices at home.

In a draft of its revised economic growth strategy, the government promised to ease regulations in the agriculture, employment and health-care areas that have been criticized as preventing the country’s deflation-beset economy from recuperating.

But it remains to be seen whether many of the policy proposals will be really achieved, given the nation’s precarious fiscal health and lingering protests from the farm and medical sectors that have long been protected by the so-called “rock-hard regulations.”

In the draft presented to a meeting of the Industrial Competitiveness Council on Monday, the government said it will reduce Japan’s 35 percent corporate income tax rate — compared with China’s 25 percent and South Korea’s roughly 24 percent — to below 30 percent within a few years from fiscal 2015.

The proposed tax cut is designed to invigorate investment in Japan from abroad. The draft, however, did not show how to cover a possible decline in tax revenues in the wake of the tax cuts.

The Abe administration also requested that the Government Pension Investment Fund revise its investment portfolio currently dominated by domestic bonds, apparently urging it to purchase more risky assets and aiming to prompt foreign investors to buy Japanese stocks.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza