Excerpt from "Shinzo Abe’s Resignation Could Be an Entry Point for Japanese Stocks, Analysts Say"

By Leslie P. Norton - Aug. 28, 2020

The resignation of Japanese Prime Minister Shinzo Abe, Japan’s longest-serving prime minister, could create an entry point for Japanese equities, analysts said.

Daiju Aoki, regional CIO Japan for UBS Securities, believes Japanese equities could experience volatility, but wrote that he remains “constructive” on stocks as the Bank of Japan keeps buying equity exchange-traded funds.

In an interview, Bill Witherell, chief global economist at Cumberland Advisors, reiterated his bullish view on Japanese stocks despite Japan’s recent report of its worst quarter on record. Japan accounts for around 15% of the firm’s international portfolios, held through iShares MSCI Japan ETF (ticker: EWJ) and through iShares MSCI ACWI ex U.S. (ACWX). “We’re maintaining our position,” on the theory that Abe’s successor will come from the leadership of the ruling Liberal Democratic Party, Witherell said.

Abe became prime minister a year after China overtook Japan as the world’s second-largest economy and 23 years after Japan’s stock market peaked. He lent his name to ‘Abenomics,’ a three-pronged plan to combat deflation and revive Japanese economic growth, including aggressive easing from the Bank of Japan, government spending, and structural reforms. During that time, the Bank of Japan set an inflation target of 2%. But Japan has never managed to reach that, and many of Abe’s projects remained unfinished.

Full article at Barron's (paywall): https://www.barrons.com/articles/shinzo-abes-resignation-could-be-an-entry-point-for-japanese-stocks-analysts-say-51598656209

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