16 July 2013

Abenomic - Japan Economy leaded by Abe

Abe’s forecast victory in an upper-house election on July 21 may strengthen his hand to push through deregulation to sustain a recovery that has so far been driven by monetary and fiscal stimulus, we call it "Abenomic" as it is driving the economy growth by printing more money like what FED did for the Quantitative Easing, in a hope to generate positive inflation rate that could force the corporate & retails to spend more on CAPEX / goods purchasing. 

We can see that it is started to generating impacts to the economy growth as the corporate started to spend more on CAPEX and shares buy back. 

To me, this is a good beginning to Japan economy as the TOPIX is actually still below 50% of its peak 39000 points since some 20 years back. In a deflation environment, people tend to keep the cash so that they could enjoy cheaper goods & services in later years. This is actually a norm in Japanese society as its getting lesser young generation due to low birth date and higher jobless rate among the younger generation has lead to more society problems. 

Japanese government is targeting a healthy 2% inflation environment in long run, so I do think that for people / corporate that are having large cash pile may started to change their mindset to combat with inflation. 

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