RBC Wealth Management: Expectation of a small chance of a Japanese central bank hike in September or October, reiterates the bullish view on the Japanese stock market
1min read The resignation of Prime Minister Fumio Kishida to run for the next LDP leadership means a change in the leadership of Japan. RBC Wealth Management believes that Japan will have its third leader since the death of former Prime Minister Shinzo Abe in 2020, and according to local political developments, as well as the cautious stance of Nariaki Nakagawa, deputy governor of the Bank of Japan, on interest rates, the probability of a Bank of Japan hike in September or October is low. The firm reiterates that the long-term factors that have driven the Nikkei, such as the end of deflation, the continued implementation of corporate restructuring and reform, and the sustained improvement in domestic demand, have not changed, and maintains its positive outlook on the Nikkei.
RBC Wealth Management notes that voters are disappointed with Prime Minister Fumio Kishida over the bribery scandal, the ongoing inflation, and the weakening yen, and that public support for Kishida has been low, and that the Nikkei has suffered its worst decline in 30 years in early August, despite the fact that the Japanese economy grew 3.1% year-on-year in the second quarter, far above market expectations, and that it reversed the contraction in the first quarter, and private consumption spending is also rising, but the recent stock market volatility and political uncertainty have reduced the likelihood of a short-term Bank of Japan hike.