SCB CIO penetrates investment strategies support the Japanese stock market There is an opportunity to generate a return on investment by trading buy. Election is expected on October 31, the LDP party is likely to have a majority. and was the head of the government Ready to continue the policy to stimulate the economy. Keep an eye on the positive impact stocks, namely Digitalization group from Digital garden city projects in various regions and the group. Infrastructure Supported by 15 trillion yen investment plan in the next 5 years
Ms. Kesri Ayuttaka, CFP® Director of Investment Strategy, SCB Chief Investment Office, Siam Commercial Bank Revealed the view on the economic outlook and investment in the Japanese stock market that Japan’s general elections will be held on Oct. 31 after LDP (Liberal Democratic Party) leader Fumio Kishida and the new prime minister of Japan. Has announced the dissolution of the House of Representatives (Lower House) on Oct. 14 ago. Opinion polls conducted by Kyodo News Agency show that 29.6 percent of respondents said they would vote for the LDP party led by Kishida, while the ruling coalition Komeito party and the CDP party, which is headed by Kishida. is the main opposition party They received 4.7% and 9.7% of support, respectively (39.4% of the respondents had yet to decide which party to choose).
The SCB CIO is of the view that the LDP party led by Mr Kishida Still tends to get more support than the opposition party as a whole. Because the popularity of the opposition party is still low. And there is a high probability that the LDP will be able to win the elections to the lower house and form the government. making it possible to continue the economic stimulus policy, which is expected after the completion of the election There is a tendency for the Cabinet to approve the additional expenditure budget. For the current fiscal year (ending March 2022) and approve the budget for the next fiscal year by December, the size of the economic stimulus package According to Mr. Kishida referred to in the previous period. It will be about 30 trillion yen (5.5% of GDP) and has a policy that focuses on the distribution of wealth and campaigns to reduce the income gap. Emphasis on economic recovery after the outbreak Emphasis on security issues with North Korea and China, as well as on close ties with the West. with additional preliminary details as follows:
For plans to raise capital gain tax on financial income From the current level of 20% to be used as a source of funding for the state. Which caused concern to most investors, the SCB CIO has the view that the Japanese government There will be no need to rush to raise tax rates. to follow a short-term income distribution plan This is because Japan’s overall income and wealth gap is not a concern. by the proportion of the country’s wealth It is held by Japan’s top 1% of the wealthiest at 11%, which is still relatively low compared to the OECD’s 27 countries and below that share of the United States, which stands at 42% if capital gains tax increases. on financial income From now on, the fixed rate of 20% applies to everyone. regardless of the financial income base This could negate previous Japanese government policies that try to encourage Japanese citizens to invest more in risky assets instead of mainly saving their money in cash and deposits. To help reduce the risk of people aging longer. and may not have enough wealth
Currently, Japanese households’ equity-to-financial asset ratio is 10%, lower than the U.S.’s 38 percent, while Japanese households’ cash and deposits-to-financial asset ratio is 54 percent, higher. of the United States, which is at 13%. In addition, the growth of the Japanese economy Not at the level that can distribute income within the country. The Japanese authorities need to focus on pro-growth stance policies before implementing income distribution policies. Through tax hikes, in the past 20 years, Japan’s real GDP has grown only 18%, lower than that of the US. that expands to 50%
In this regard, SCB CIO looks at the strategy of investing in the Japanese stock market. Overall, there is still an interesting investment focusing on the trading buy strategy from the political changes in Japan. That tends to reflect more political stability, as the LDP and the coalition party tend to have a majority in the lower house elections. This will result in continuous economic stimulation policies. and help support investment from foreign investors in the Japanese stock market Based on past statistics in the past 8 years, it is found that The Japanese stock market could improve well. especially after the general election day.
In addition, it will be found During the fourth quarter, the market still gave a fairly good average return, ranging from 6%-15%. At present, the market has received additional support from the market’s valuation level, which is not expensive compared to other developed countries’ stock markets. (TOPIX and Nikkei 225 indexes are trading PE at a 5-year average). Japanese listed companies’ earnings in the latest quarter are likely to show better-than-expected results, and EPS growth of the market both this year and next is likely to gradually was increased further
At the same time, we still see the Japanese stock market continue to benefit from the yen tendency to weaken against the US dollar, the gradual recovery of the domestic economy. and the global capex cycle that has begun to recover. SCB CIO assesses the possible impact of Mr. Kishida’s policy. per Japanese stocks in each industry found that stocks related to digitalization It is likely to benefit from Mr. Kishida’s proposal to build a digital garden city in different regions. and group stocks on the theme infrastructure It is likely to be driven by an investment plan of 15 trillion yen over the next five years to be used to prepare for and prevent various natural disasters. for the income distribution policy which is rather a long-term policy may help support domestic consumption which will be good for the retail group