By Deepta Bolaky
Prime Minister Shinzo Abe, Japan’s longest-serving prime minister officially resigned on Friday due to health issues after a few weeks of speculations. Amid a global pandemic, markets fret that his resignation may create a new period of political uncertainty for Japan. Since the announcement, a few ministers from the ruling party expressed their intention to run for Prime Minister but the successor is yet to be known.
The Prime Minister is well-known for his Abenomics – a nickname used for the multi-pronged economic policies implemented by Prime Minister Shinzo Abe since he came into power in late 2012. The Abe government has unveiled a comprehensive policy package to revive the Japanese economy from two decades of deflation while still maintaining fiscal discipline.
This approach consists of Aggressive Monetary Policy, Flexible Fiscal Policy and Structural Reform.
Japan is the world’s third-largest economy and such sudden resignation may not only have an impact on the local markets but may affect global markets as well. On Monday, we have seen that the markets are relying more on the expectations that a successor will likely be someone that will adhere to Abe’s economic views and be supportive of the existing policies.
In a pandemic-induced environment, investors are looking for reassurances that there will be no major or structural shift in policy.
Shares in Japan outperformed and led gains in the Asia/Pacific region today. As of writing, the Nikkei 225 index was up by 1.3% or 299 points to 23,182 while the Topic index trading 1% or 17 points higher at 1,622. The Nikkei index also found support from Warren Buffet’s buy-in position in five leading Japanese trading companies.
Berkshire Hathaway announced the acquisition of slightly more than 5% stake in Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co Ltd and Sumitomo Corp.
By Deepta Bolaky
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