“The effect on the stock market is clear: A strengthening, both directly through Bank of Japan equity purchases, and, indirectly, through the positive effect on corporate profitability that results from a weakening yen,” according to DeAWM.
Looking ahead, Abe’s third arrow, structural reforms, will include a range of initiatives to further support growth, including the “Japan Revitalization Strategy,” which will overhaul key sectors, cut corporate tax rates and raise labor force participation by women.
“We are optimistic that the ongoing reforms targeting the capital efficiency of Japanese companies could be the equity market’s next catalyst and have lasting positive effects,” according to DeAWM. “We have already seen the fruits of these policies in the form of improving earnings, record stock buybacks and dividend revisions.”
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Max Chen contributed to this article.