Investment Clock insights

Shinzo Abe wins big victory in Japan’s election


Hiroki Hashimoto

23 October 2017

Unlike May's gamble, Abe gets the mandate he wanted and sets himself up to become Japan’s longest serving PM. However, perhaps the biggest surprise of the night was the poor result for Koike's Party of Hope. 
Speaking to my friends ahead of the day, most people seemed to be disengaged, given the opinion polls suggesting a comfortable victory for Abe. The arrival of Typhoon Lan would have almost certainly been a contributing factor for low turnout numbers, but the turnout ratio was the second lowest level since World War 2. 
The fact that Koike was in Paris on the election night speaks volumes. 
Some could argue this was expected and largely priced in, but I suspect quite a few investors would have taken off some bets given the past political shocks, so we could get some relief rally and yen weakness.
We expect a continuation of loose monetary policy so once the dust settles, Japan and the yen will be once again a global yield play. Yield curve control means yen weakens as global yields rise, positive for Japanese stocks.

Unlike May's gamble, Abe gets the mandate he wanted and sets himself up to become Japan’s longest serving PM. However, perhaps the biggest surprise of the night was the poor result for Koike's Party of Hope. 

Speaking to my friends ahead of the day, most people seemed to be disengaged, given the opinion polls suggesting a comfortable victory for Abe. The arrival of Typhoon Lan would have almost certainly been a contributing factor for low turnout numbers, but the turnout ratio was the second lowest level since World War 2. 

The fact that Koike was in Paris on the election night speaks volumes. 

Some could argue this was expected and largely priced in, but I suspect quite a few investors would have taken off some bets given the past political shocks, so we could get some relief rally and yen weakness.

We expect a continuation of loose monetary policy so once the dust settles, Japan and the yen will be once again a global yield play. Yield curve control means yen weakens as global yields rise, positive for Japanese stocks.

Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.