Abe’s Stimulus Package May Boost Japanese Stocks Even Further

(Bloomberg) -- Japan's benchmark equity gauge is up 15% this year and may have much further to run on a boost from government stimulus, Mitsubishi UFJ Morgan Stanley Securities Co. said.

“We believe the announcement of a stimulus package has positive implications for the stock market,” Tsutomu Saito and Makoto Furukawa, strategists at Mitsubishi UFJ, wrote in a note Friday. “Historical data show that on average, stocks rise by about 30% in the year after large-scale stimulus measures are approved by the Cabinet.”

Prime Minister Shinzo Abe on Thursday announced a package totaling about 26 trillion yen ($239 billion) over the coming years. Abe said it was aimed at disaster relief, protecting against economic risks and preparing the country for longer-term growth.

The Topix index rose for a second day Friday, with steel and cement makers as well as construction firms among the biggest gainers.

The Topix surged 51% in 2013, the first full year of Abe's tenure as prime minister, during which he encouraged overseas investors to “buy my Abenomics” in a speech at the New York Stock Exchange. The market averaged a gain of 3.6% over 2014-18.

To contact the reporter on this story: Kurt Schussler in Tokyo at kschussler1@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Teo Chian Wei

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