Chaotic day in Tokyo. With a drop of 4.8%the Nikkei 225 is experiencing one of the biggest daily declines of the year. The selective pays the surprise victory of Shigero Ishiba, the former Minister of Defense and Agriculture. The new senior official announced that, upon coming to power, he would dissolve the chambers and call new legislative elections. The markets did not expect that this candidate could defeat Sanae Takaichi and the turn of events took investors by surprise but… why did he upset the market so much?
From Julius Baer, they explain that the new prime minister “believes that he must correct Abenomics (the policies implemented by Prime Minister Shinzo Abe)” and, therefore, “correct the position of the Japanese yen so that ‘he be strong’, which is not the case. not large listed companies like this one, which They take advantage of the low value of the currency grow in its international markets.
Ishiba, for his part, relies on a policy of strict fiscal control and has repeatedly mentioned two very controversial measures for this purpose, additional income tax businesses and another to dividends two. “The market is concerned about these taxes and, in our opinion, there will be a lot of volatility until this issue is clarified.”
Finally, the arrival in power of this politician leaves many unknowns. First of all at the international level »is aggressive, betting on an Asian NATO and the existence of a great national force”, comments the Swiss firm. Something which, although good for the defense sector, implies geopolitical uncertainty, particularly due to relations with China and Russia. On the internal plan “the “beginnings The elections that Ishiba has just called could also add uncertainty to the Japanese market “.
All these factors meant that even the not-encouraging retail sales data for August, with an increase of 2.8% year-on-year, beating analysts’ estimates of 2.3%, were able to prevent the drastic fall. of its market to become consumption. However, there is another reason that has also contributed to a powerful decline turning into a flight: China.
The CSI 300 index soars by 6% compared to the official purchasing managers’ index, which reaches 49.8 points, on the verge of emerging from contraction (50 points marks the limit). In this sense, Magellan Capital, in statements to CNBC, emphasized that the Japanese market had largely served as a refuge against the weakness of the Chinese market. “Now Beijing’s stimulus measures and the change in trend mean that the Tokyo stock market is under pressure,” says manager Britney Lam.
