ISG Global: Stocks in Japanese companies jumped by nearly 2% after a Reuters report which cited sources close to Japanese Prime Minister, Shinzo Abe is set to unveil a stimulus package worth 27 trillion yen or $265 billion as he continues to try to revive his country’s flagging economy.
The number exceeds initial estimates placing the stimulus at around 20 trillion yen and it is thought that 13 trillion will be fiscal measures. Japanese stocks have been range-bound in recent weeks as the Bank of Japan’s Governor, Haruhiko Kuroda, has attempted to dampen speculation that the central bank would introduce so-called “Helicopter Money”, where the central bank directly finances government spending by printing money.
“Stocks would have surged higher but the yen was already weakening on reports in the Wall Street Journal that the Japanese government was to begin issuing 50 year bonds,” said Kit Morton, chief economist at ISG-Global.
“The fact that 13 trillion yen of the stimulus could be in the form of fiscal measures does beg the question of how the Japanese government intends to finance them. Either way, both the government and the central bank are in the unenviable position of having to deliver something to combat Japan’s lackluster economic growth, especially if Abe is to make use of the implied mandate he secured after his Liberal Democrat Party’s success in a recent Upper House election.”
ISG-Global says it has no plans to vary the weighting of Japanese stocks in its portfolio and will await the outcome of the Bank of Japan’s policy meeting set to conclude Friday.

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