Euroconsumers Invest’s Post

Key impacts expected from the Japan 🇯🇵 elections where the ruling LDP coalition is likely to lose its majority for the 1st time since 2009: 𝐌𝐚𝐫𝐤𝐞𝐭 𝐈𝐦𝐩𝐚𝐜𝐭𝐬 → Japanese stocks (Nikkei) are expected to decline. → The Japanese Yen is expected to weaken further. → Long-term Japanese government bond yields are likely to rise. 𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐑𝐞𝐥𝐚𝐭𝐢𝐨𝐧𝐬 → Possible impact on strategic relationships and trade policies. → Currency markets may see increased volatility. → Investment climate uncertainty in the short term. 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐏𝐨𝐥𝐢𝐜𝐲 𝐂𝐡𝐚𝐧𝐠𝐞𝐬 → Increased fiscal spending is likely as the new coalition seeks to demonstrate effectiveness. → Potential shift away from challenging reforms like corporate tax rate increases. → Greater focus on government expenditure to maintain coalition stability. 𝐌𝐨𝐧𝐞𝐭𝐚𝐫𝐲 𝐏𝐨𝐥𝐢𝐜𝐲 → Opposition parties advocate for lower interest rates. → The Bank of Japan's policy approach may face new pressures. → Potential delay in monetary policy normalization. #JapanElection2024 #JapanVotes #LDPJapan #JapanPolitics #LDP #Komeito #CDPJ #JapanOppositionv #JapanCoalition #NikkeiIndex #JapaneseYen #JPYtrading #JapanMarkets #AsiaMarkets #JapanNews #TokyoNews #AsiaNews #PoliticalUncertainty #JapanEconomy

🌍 Major Stimulus in Japan! 💰 Today, Japan's minority government has approved a massive $140-billion stimulus package aimed at invigorating consumer spending and boosting the economy. This comes after the ruling Liberal Democratic Party faced its worst election results in 15 years, amid voter dissatisfaction with inflation and corruption. The new package includes measures like 30,000 yen handouts to low-income households, subsidies for fuel and energy, and support for small businesses. This move is expected to significantly impact the economy, aiming to inject vitality into both national and regional markets while increasing wages for all generations. However, there are concerns about the rising national debt and its sustainability, especially with ongoing hikes in interest rates. With this stimulus, Prime Minister Shigeru Ishiba also plans to address Japan's demographic challenges and revitalize rural areas. The next few months will be critical as the government tables a supplementary budget and navigates opposition party demands. Link in comments #Economy #Japan #StimulusPackage

🌍 Major Stimulus in Japan! 💰 Today, Japan's minority government has approved a massive $140-billion stimulus package aimed at invigorating consumer spending and boosting the economy. This comes after the ruling Liberal Democratic Party faced its worst election results in 15 years, amid voter dissatisfaction with inflation and corruption. The new package includes measures like 30,000 yen handouts to low-income households, subsidies for fuel and energy, and support for small businesses. This move is expected to significantly impact the economy, aiming to inject vitality into both national and regional markets while increasing wages for all generations. However, there are concerns about the rising national debt and its sustainability, especially with ongoing hikes in interest rates. With this stimulus, Prime Minister Shigeru Ishiba also plans to address Japan's demographic challenges and revitalize rural areas. The next few months will be critical as the government tables a supplementary budget and navigates opposition party demands. Link in comments #Economy #Japan #StimulusPackage

❗ **USD/JPY set to retreat toward 152.38 after elections-related leap** Political instability – even in Japan. The new Prime Minister called a snap election to consolidate his rule, and found himself without a majority in parliament. Neither the ruling LDP party nor a combination of this party and its traditional coalition partner, cannot muster a majority, and that means political uncertainty. In such circumstances, the Bank of Japan is unlikely to raise rates – and that is why the Yen is falling. The drop is major, with a weekend gap on Yen crosses. However, Japan is still a stable country, and I expect a solution to be found. In general, the panic move was massive, and it will likely fade away. USD/JPY has some support at 153.13, which capped it last week, then 152.38, the close last week. Resistance is at the daily high of 153.93, then 155.30. THe broad trend remains to the upside, but the leap may have gone too far.

Understanding Japan's Position as the Highest Indebted Country in the World Did you know that Japan holds the title of being the highest indebted country globally? This fact may surprise many, considering Japan's reputation for economic prowess and technological advancement. However, delving deeper into this issue unveils a complex economic landscape that sheds light on Japan's unique challenges and strategies. Japan's high level of debt is primarily a result of long-standing economic policies and demographic trends. One key factor is the country's aging population and low birth rate, leading to increased spending on pensions and healthcare for the elderly. Additionally, Japan has faced periods of economic stagnation, prompting government stimulus packages and infrastructure spending to spur growth. The Japanese government has utilized various measures to manage its debt, including issuing bonds and implementing fiscal reforms. However, the sheer magnitude of the debt remains a concern for policymakers and economists alike. Despite these challenges, Japan continues to be a global economic powerhouse, with thriving industries in technology, automotive, and finance. The country's resilience and innovative spirit are evident in its ability to navigate complex economic terrain while maintaining a competitive edge on the world stage. As we reflect on Japan's status as the highest indebted country, it serves as a reminder of the interconnectedness of global economies and the importance of strategic financial management. It also highlights the need for continuous innovation and adaptation to address evolving economic dynamics. #JapanEconomy #GlobalDebt #EconomicInsights #FinancialManagement #InnovationInEconomics

Since the COVD-19 pandemic, #Japan’s public #debt has increased due to its large fiscal stimulus policies. Today, Japan grapples with a record high public debt of around 260% of GDP, highest among advanced economies. Despite the fading impact of the pandemic and the steady recovery of the Japanese economy, the government has continued to pursue an expansionary #fiscal policy. In our latest #blog, AMRO economists Juan Paolo Hernando and Jae Young Lee highlight the need to strike a right balance between growth-enhancing spending and fiscal consolidation to sustain long-term fiscal sustainability and economic resilience. ▶️ Find out more from the blog: bit.ly/3V8N3GW

𝗝𝗮𝗽𝗮𝗻'𝘀 𝗘𝗰𝗼𝗻𝗼𝗺𝘆 𝗘𝘅𝗽𝗮𝗻𝗱𝘀 𝗔𝗺𝗶𝗱 𝗚𝗿𝗼𝘄𝗶𝗻𝗴 𝗣𝗼𝗹𝗶𝘁𝗶𝗰𝗮𝗹 𝗨𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻𝘁𝘆 Japan's economy grew at an annualised rate of 2.9% in the April-June period, slightly below the previously reported 3.1%, according to revised government data. The growth was driven by higher wages, increased household spending, and robust investments from both the private and public sectors. Exports also surged by 6.1%, surpassing earlier estimates. However, risks remain, including the impact of U.S. economic performance on Japan’s export-driven economy and political uncertainty as Japan's ruling Liberal Democratic Party prepares to select a new leader to succeed Prime Minister Fumio Kishida. The winner of the September 27 party election is likely to become the next prime minister. How will all this impact the Yen? We will be watching the charts that's for sure.

Shigeru Ishiba's recent election as leader of Japan's ruling Liberal Democratic Party marks a pivotal moment for the nation's economic landscape. His support for tightening monetary policy contrasts sharply with the Abenomics strategies championed by his predecessor, signaling a potential shift towards greater fiscal responsibility. The immediate market reaction is telling: the yen surged over 1% against the U.S. dollar, while stock futures fell, revealing investor apprehension about tighter monetary conditions. This shift could benefit the financial sector but might challenge Japan’s export-driven industries that thrive in a weaker currency environment. As Ishiba steps into the role of prime minister, all eyes will be on how his policies balance economic prudence with necessary reforms. Japan's business landscape now faces a delicate transition—one that could reshape its political and economic future. How will you prepare for this new era?

What about Japan? As a result of the Bank of Japan’s large-scale asset purchases, the consolidated Japanese government borrows mostly at the floating rate from households and invests in longer-duration risky assets to earn an more than 3% of GDP in expectation. The authors of this Federal Reserve Bank of St. Louis paper quantify the impact of Japan’s low-rate policies on its government and households. Because of the duration mismatch on the government balance sheet, the government’s fiscal space expands when real rates decline, allowing the government to keep its promises to older Japanese households. A typical younger Japanese household does not have enough duration in its portfolio to continue to finance its spending plan and will be worse off. Low-rate policies tend to tax younger and less financially sophisticated households. 

Japan’s ruling alliance, the LDP and the Komeito, took a drubbing in the general election yesterday, losing a quarter of their seats and therefore losing their majority. As forecast, the stock market blew PM Ishiba a big raspberry and rose 1.5%. Where Abe was about print & spend, PM Ishiba, being perversely anti-Abe, wanted precisely the opposite. Higher taxes and lower spending would have been bad for markets, so investors decided the less Ishiba the better. For most of the 38 years I’ve lived in Japan, politics has generally been little more than a titillating Punch & Judy show with little impact on markets. Abe was very different and we miss him. People who tell you government controls the BoJ aren’t completely wrong - just a few decades out of date. The BoJ was given its independence in the BoJ Act of 1997. Sure, Haruhiko Kuroda executed policies in line with what Abe wanted: Abe hired him to do precisely that. Gov.Ueda and his deputies still have 3.4years to run. For clients, I hope you enjoy my new report ‘The lettuce Prime Minister’: https://lnkd.in/gUsXYGV2 #japan #japanbusiness #equitystrategy #equityinvesting