Abenomics now in the downturn

The Abenomics concept implementation has done more harm than good to the Japanese economy, instilling mistrust among foreign investors.

Despite the injection of cash in Japanese shares last year, no significant impact has been noticed on holdings, and foreign investment soured consequently.

The Abenomics concept also consisted in increasing sales tax which further disappointed investors as this was the brink that ousted Japan into a recessionary state.

With investors being very skeptical about the future of Japan, Prime Minister shinzo abe will notable have to convince them back with more structural reforms.

Ayako Sera of Sumitomo Mitsui Trust says that in an attempt to bring investors back, Abe will have to end the dependency on monetary easing because the more stock’s price increases, the less investment will likely be obtained.

Previously, the Tokyo Stock Exchange showed that foreign investors were less than a tenth of what was noticed last year.

Katrina Lamb of MV Financial, on her side states that Japan’s restrictive outlook towards global fusion is disadvantageous as avoiding international portfolios hurt Japanese stocks.

When Abe first introduced its three arrow concept in 2013, foreign investors were very enthusiast, thinking the Japan will maintain its standing as the leader in the market.

Nevertheless, Shinzo Abe has another mandate to fulfill asfter he won the early elections and has the potential to bring Japan out of recession with more structural reforms.

Investors are now waiting to see fundamental changes in the labor market and for an agreement in the Trans-Pacific Partnership pact.

Source: Bloomberg

Priscilla Camryn By: Priscilla Camryn