Japan's stock market is on a roll, and Fidelity International believes this upward trajectory will persist, regardless of political shifts. But here's the catch: it all hinges on the government's commitment to sustaining economic growth and preventing a deflationary relapse.
The Nikkei 225 index recently hit an all-time high, surpassing the iconic 1989 economic bubble peak. This achievement comes amidst a political backdrop, with parties vying for power ahead of a crucial parliamentary vote.
Miyuki Kashima, head of investments at Fidelity Japan, asserts that the market's future depends on the government's dedication to its growth strategy, not on individual leadership. Japan's 'lost decades' of stagnation and deflation, marked by rising unemployment and hiring cuts, prompted the government to implement monetary and fiscal stimulus measures.
Kashima believes that any new ruling coalition would be ill-advised to abandon these efforts and risk a return to deflation. Japan's economy is currently experiencing inflation, and with deflation seemingly behind us, the economy is poised for continued growth. Companies are investing, creating a positive feedback loop that fuels further economic expansion.
So, will Japan's market boom continue? It's a question of government commitment to growth strategies. And this is the part most people miss: it's not about who's in power, but what policies they uphold. What do you think? Will Japan's market maintain its momentum, or is a political shift likely to impact its economic trajectory? Weigh in with your thoughts in the comments!
