Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Harakiri - Japanese Prime Minister Shinzo Resignation

Politics / Japan Economy Sep 15, 2007 - 01:04 PM GMT

By: Yiannis_G_Mostrous

Politics Japanese Prime Minister Shinzo Abe finally resigned, apparently unable to withstand the pressure from the anti-reform factions of his party. It looks like he walked into the trap after promoting a lot of anti-reform party members to key positions in the cabinet in the last government reshuffling.


For people like me who've been watching Japan try to come out of its frustrating economic past, this is certainly a setback. Abe proved that he was no Koizumi, as he was unable to pass a lot of Japan's reform initiatives.

It's clear that a total reversal of the economic reform process is now a possibility that, if materialized, will have dire consequences for the future of the Japanese economy. Once the political establishment goes back to its old ways, any attempt for real and sustainable economic growth will be doomed.

Unless the Liberal Democratic Party (LDP) is able to elect a pro-reform leader--something that seems unlikely at the moment--expect the business environment to also deteriorate with reforms labeled a failure as a whole. The result of all these will be deterioration in future earnings growth and an even weaker stock market.

This becomes more crucial as the uncertainty in global financial markets continues, and elections are approaching fast in Japan. This isn't the right time for implementing change.

But there's no reason to sell Japanese stocks that you own yet, solely based on the political developments in the country. Instead, a wait-and-see approach should be preferred because Japan can remain, at the very least, a great proxy market for global economic growth given its export-oriented economy.

Koizumi tried to change this export orientation in an effort to help domestic demand grow, giving the economy greater balance and a better chance to withstand global economic downturns in the future. This process has now been stopped.

At the same time that all this is happening in Japan, the global markets are looking for direction. For the time being, the upside seems to be winning. But more bad news on the credit front can change the mood.

However, the markets have a good chance to finish the year strong. But I expect some weakness sometime between now and the end of October.

Asian markets in particular should benefit from a scenario in which the US economy avoids recession, but the dollar remains relatively weak. During down times in the US, Asian markets will suffer given their size and perceived risk. But that dynamic is changing; Asia no longer gets pneumonia when the US catches a cold.

Short term, things may get volatile. But long term, Asian economies are better positioned than ever to withstand adversity. Asia market perma-bears will have to wait a long time for an economic meltdown in the region. After all, the majority of the Asian economies have current account surpluses, while debts have been substantially reduced, and deficits are also contained.

At this juncture, and in an Asian context, look for companies in the telecommunications, utilities, banking and real estate sectors to add to your portfolios.

By Yiannis G. Mostrous
Editor: Silk Road Investor, Growth Engines
http://www.growthengines.com

Yiannis G. Mostrous is an associate editor of Personal Finance . He's editor of The Silk Road Investor , a financial advisory devoted to explaining the most profitable facets of emerging global economies, and Growth Engines , a free e-zine that provides regular updates on global markets. He's also an author of The Silk Road To Riches: How You Can Profit By Investing In Asia's Newfound Prosperity .

Yiannis_G_Mostrous Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in