Japan's 'new normal' gathers pace

JAPAN

Chetun Patel, head of strategy at Mariana Capital, says as the Japanese authorities try to create a ‘new normal', there are finally signs the Japanese people are ready to embrace it too.

To change from a deflationary to an inflationary environment takes a change in the ‘normal' functioning of the economy. The trigger for such a big shift could be external (such as the 2008 financial crisis), or internal (Abenomics, for example), to bring about a new normal. The three arrows of Abenomics heralded such a change, causing the 29% rally in Nikkei in dollar terms in 2013, and the depreciation of the dollar yen of 28% since the beginning of Abenomics. This year the Nikkei has lost 6.6%, underperforming other core stock markets as it got caught up in the fears over emerging m...