Abenomics Prove Effective for Boosting Japanese Growth

Japan has been instituting several new economic initiatives, known as Abenomics, to boost growth in the region. According to several investment trust managers, these efforts are proving effective.

Bailie Gifford Japan investment trust manager Sarah Whitley said:

“Abenomics is a wide-ranging programme to revitalise the Japanese economy and raise its growth rate in the long term, as well as provide short-term stimulus. During the past year the yen has weakened significantly, allowing Japanese manufacturing to be re-priced into world markets, company sentiment has improved tremendously and there are encouraging signs that growth is spreading into the broad domestic economy.”

Aberdeen Japan investment trust manager Kwok Chern-Yeh added that while some are concerned, Japan’s new sales tax may not have a negative impact on the situation.

“The consumption tax hike is a crucial step towards fiscal consolidation – raising the national sales tax from 5 to 8 per cent will help address the nation’s ballooning public debt,” he said. “One worry in the short term is that discretionary spending will fall after the tax has been implemented, although the government is hoping to cushion the short-term impact with a ¥5.5 trillion stimulus package. If Abenomics works and the economy grows then consumers will spend more as the economy rises anyway.”


Mirae Asset Global On Emerging Markets

A number of major global investment firms are choosing emerging markets in an effort to recover from the latest financial slump. Mirae Asset Global, a firm with $58 billion under management, explained that emerging economies are the hub of global output. The leading market is China, they added.

“We are positive on equities for 2013, although not outrightly bullish,” Mirae analysts wrote in a client report last week. “We believe that the earnings downgrade cycle has ended… and that economic recovery will be slower than in previous cycles as the economies of China and India work to correct their imbalances and are restricted in their ability to pump prime growth.”

The report added, “We are identifying pockets of overvaluation in consumer sectors, and now favor early-cycle consumer discretionary and financials over staples. Industrials and health care stand out as combining structural growth, government support and reasonable valuation.”