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(Bloomberg) – While Yoshihide Suga will now surely be declared Japan’s minister next Wednesday, market observers are examining the choice of the unpretentious son of a strawberry producer for the country’s inventory markets.
While Suga was long thought to be one of the main contenders to upgrade Abe when he resigned, the speed at which the leaders of the ruling Liberal Democratic Party acted to get rid of him was unexpected, although so far his policy has not changed.
Japan’s Suga wins ruling race to upgrade Prime Minister Abe
“Ultimately, we don’t expect any primary policy adjustment until Covid-19’s risk disappears,” Jefferies analysts wrote, who added Sean Darby, after his party’s appointment of Suga. “Japan is recovering much faster than markets would have expected. Three months ago. Strong financial expansion with tangible benefits is an offer for Japanese inventory prices. »
An organization that is not very happy to see Suga as prime minister will invest in Japanese cellular operators. Suga has spent much of the more than two years attacking the three classic operators for their apparent lack of competition, which Suga says has led Japanese consumers to have a higher position. cellular charges than in other countries. He also noted the gigantic profit margins of the 3 and threatened Sunday to accumulate the rates that operators pay for the use of radio waves.
NTT Docomo Inc. , and KDDI Corp. , the two largest operators in the country, have lost a combined market spot of $20 billion since Abe announced his resignation. Shares of Rakuten Inc. , which recently entered the market place as the fourth largest trader in a competitive move, taller up to 31%.
Fertility stocks
“With the exception of several giant telecommunications stocks, Japanese threat markets were satisfied with Suga’s transparent leader status, and will likely remain so after his simple victory,” wrote John Vail, a global leader strata. Nikko Asset Management. ” He is not only suing Abenomics, but also probably his Third Arrow economic reforms. Japan continues to have one of the strongest and most business-friendly governments in the evolved world. “
One of Suga’s areas of interest that has illuminated stock markets since he began campaigning to upgrade Abe has been a call to eliminate fertility remedies under the national insurance system, in order to reduce the country’s birth rates. they were one of the first winners of “Suganomics”, along with Aska Pharmaceutical Co. and CellSource Co. , adding 40% since Abe’s resignation on August 28.
Next cabinet
Now that Suga is shown as leader of the ruling party, the focus will be on the coming days on who he chooses for his cabinet. Deregulation, structural reforms, and aid for Japan’s regional regions deserve to be the company’s priorities, which will first face the continued damage of the coronavirus pandemic.
Structural reforms will affect Japan’s prospective expansion rate and put upward pressure on long-term bond yields, according to Mitsubishi UFJ Morgan Stanley Securities.
Suga said Monday that Finance Minister Taro Aso and LDP Secretary General Toshihiro Nikai would be the central staff of his administration, and that he has not yet made a decision on whether they will remain in their current posts. he said.
But the main factor for market observers is likely to be the prospect of imaginable early elections.
“Given that the trade reforms and deregulation that Mr. Suga’s strong desire to achieve will likely take time to implement, we expect attention to be paid to whether the new administration will move to the polls until the end of the year to ensure enough It’s time for policy implementation,” Goldman Sachs economist Naohiko Baba wrote on a note Monday.
With Suga High, an early choice can be positive for stock markets. SMBC analysts Nikko Masashi Akutsu and Hikaru Yasuda wrote in a September 2 memorandum that inventory costs tend to start emerging about 30 days before a small space choice and increase. after the vote, in cases where the ruling LDP has not lost seats.
Instant voting can be a catalyst for Japanese traders: balance sheet
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