Why the Bank of Japan could disappoint markets this month

Recent reversal in equity markets

Michael Stanes, investment director at Heartwood Investment Management, analyses the future for Japan following a recent reversal in equity market gains.

Despite surging ahead in the first half of 2015, the Japanese equity market has reversed much of the year-to-date gains since July. The pullback coincided with a strengthening yen during the period of risk aversion sparked by worries over China's economic slowdown. The market has been interpreting recent economic disappointments, including persistently weak inflation, as a sign that the Bank of Japan will provide further policy support, potentially by the end of this month. Japan's macro picture has been uninspiring. Export levels have deteriorated since March, a large factor being th...