Japanese equity market drivers for the next 12 months include fiscal stimulus, Bank of Japan (BoJ) intervention, the impact of Covid-19 and EPS revisions.
Fiscal stimulus should be supportive of a sharp economic rebound: Japanese government announced its second supplementary budget on 27 May with fiscal spending of ¥31.9trn (5.9% of GDP). The main focus of this budget is to support companies and avert bankruptcies and lay-offs. Japan's economy should now be well supported and be in a strong position to rebound from the Covid-19 impact. Recent data is pointing to a rosier economic outlook as on 8 June, Japan Real GDP for Jan-Mar was -2.2% QoQ (annualised) vs. -3.4% reported preliminarily. BoJ intervention provides a floor to the Topix...
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