It is important to seek growth first, and I will do my utmost to realise it.” Kishida’s goal of wealth redistribution initially had negative reactions, as the prospect of additional taxes on investment income scared investors however, Kishida has since responded by saying that economic growth is his primary imperative before any redistribution can occur: “Unless there is growth there is nothing to distribute. Kishida’s fiscal plans are the latest attempt of policymakers to fight against the deflationary forces of Japan’s aging demographics and debt overhang. Domestic manufacturing should benefit alongside rising productivity. Like Japan’s previous Prime Minister Suga, policymakers will continue to push corporations to increase capital expenditures (capex) and promote digitalisation. Kishida’s primary goal is to help revitalise the domestic economy and stimulate growth. These results will give Kishida ample ability to start his agenda for expansive fiscal policy, which is anticipated to be about ¥40 trillion (US $350 billion, or ~7.3% of Japan’s gross domestic product ). Kishida’s Growth Strategy: Near-Term Growth, Long-Term Redistributionįumio Kishida was elected Prime Minister of Japan in early October, and his Liberal Democratic Party (LDP) secured an absolute majority in the Lower House, which is a legislative body of the Japanese government. The yen has attractive defensive characteristics for a multi-asset portfolio but faces some headwinds from rising interest rate differentials and worsening terms of trade. Government bond yields are expected to remain anchored by continued easy monetary policy from the Bank of Japan (BoJ), which is also a relative advantage to Japanese equities as interest rates lurch higher elsewhere. Equities could potentially benefit from an improving Japanese macro backdrop alongside strengthening corporate fundamentals. Multi-Asset Considerations – Japanese equities are relatively cheap, but that is nothing new.Additional economic risks revolve around global trade and rising energy prices. Instead, aging demographics have proven to be a formidable headwind to growth. Economic Momentum Meets Familiar Risks – Fiscal aspirations are not new to Japan, but most fiscal plans have fallen short over the past decade.Our macro outlook for Japan is encouraging. Since then, Japan has started to experience positive economic momentum.

Substantial progress this summer led to the end of Japan’s State of Emergency lockdown in October. Japan’s rapid vaccination and macro momentum – Japan has evolved from a laggard to leader in COVID-19 vaccination rates.Newly elected Prime Minister Fumio Kishida should continue to support easy monetary policy while aiming to employ expansionary fiscal policy by developing a considerable stimulus package.This combination of local and global themes leads us to focus on Japan and further explore these topics and their multi-asset implications. Japan also has a front-row seat to the world’s global trade issues as its key export industries, like the automotive industry, are entangled in the global supply chain. Japan has emerged as a leader in COVID vaccination rates after initially lagging the broader world. Globally, Japan has a unique exposure to two key themes: COVID-19 and global trade. Local elections have given way to a new Prime Minister, Fumio Kishida, and our attention is piqued as policy often leads macroeconomics. Japan’s economy is at the confluence of many macroeconomic trends, both local and global.

A few arrows short of a quiver meaning