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15 Dec 2014
Abe victory could rekindle the “third arrow” of Abenomics – Nomura
FXStreet (Barcelona) - Hisao Matsuura, Research Analyst at Nomura believes that Abenomics’ “third arrow”, namely growth strategies, might see a good progress in spite of many investors doubting this, and expects the volatility in economic growth to ease as a result of postponing the consumption tax hike.
Key Quotes
“We think the decision to hold a snap election indicates clearly that key legislation was shelved during the extraordinary Diet session. As the essence of Abenomics is to stoke expectations, we think a snap election would not only deliver a verdict on the decision to postpone the consumption tax hike, but could also rekindle flagging expectations about the “third arrow” of Abenomics, namely growth strategies.”
“However, we do not think this election has raised expectations for change. Still, we have a positive view of clear prospects for the Abe administration to pursue the second phase of Abenomics. Our impression is that most investors have doubts about the "third arrow" of Abenomics, but we still see good progress on this front during 2014 in terms of improving public pension investment, reforming corporate taxes, and strengthening corporate governance.”
“We believe the search for the next priority among the many growth strategies that have been presented could be an important focus point for Japanese equities in 2015.”
“We also expect volatility in economic growth rates to ease as a result of postponing the consumption tax hike. From this perspective, we look forward to seeing whether the "third arrow" produces results.”
Key Quotes
“We think the decision to hold a snap election indicates clearly that key legislation was shelved during the extraordinary Diet session. As the essence of Abenomics is to stoke expectations, we think a snap election would not only deliver a verdict on the decision to postpone the consumption tax hike, but could also rekindle flagging expectations about the “third arrow” of Abenomics, namely growth strategies.”
“However, we do not think this election has raised expectations for change. Still, we have a positive view of clear prospects for the Abe administration to pursue the second phase of Abenomics. Our impression is that most investors have doubts about the "third arrow" of Abenomics, but we still see good progress on this front during 2014 in terms of improving public pension investment, reforming corporate taxes, and strengthening corporate governance.”
“We believe the search for the next priority among the many growth strategies that have been presented could be an important focus point for Japanese equities in 2015.”
“We also expect volatility in economic growth rates to ease as a result of postponing the consumption tax hike. From this perspective, we look forward to seeing whether the "third arrow" produces results.”