June 5 (Reuters) – The Abenomics attempt to revive Japan is
already flagging, a development which will hurt equities
Nikkei 225 stock index futures fell another 4.22
percent ahead of Tokyo’s Thursday trading session, as investors
reacted with disappointment to Prime Minister Shinzo Abe’s plans
for structural reforms. That would take the index’s fall
well past the bear market barrier of 20 percent down from its
May 22 peak.
Any loss of faith in Abenomics, an ambitious cocktail of
fiscal and monetary stimulus poured over a base of reforms, will
not only reverse the stunning gains seen in Japanese markets but
crimp liquidity and stimulus which has been supporting growth
and risky assets elsewhere.
WHAT’S GONE WRONG
The latest down-leg has been prompted by a much ballyhooed
speech by Abe intended to flesh out plans for reforms. The
headline figure, a target of increasing income by 3 percent
annually, was specific as a number, but the route to get there
is vague. Also on offer were new special economic zones with
less regulation, as well as new rules allowing the sale of
nonprescription medication over the Internet.
Hardly the stuff to turn Japan into Silicon Valley.
Abe also said the new rules won’t be debated until the
autumn, an indication that he is less than eager to take on the
many interests which will be hurt by reform.