Japan investors bet on Suga's Abenomics 2.0, buy travel stocks

West Japan Railway

31/08/2020 10:24

* Investors expect Chief Cabinet Secretary Suga to succeed
Abe
    * Telecom shares down as Suga wants lower mobile phone rates
    * Suga seen as continuing Abe's policy stance 
    * Nikkei recovers losses, yen steadies 

    By Hideyuki Sano and Stanley White
    TOKYO, Aug 31 (Reuters) - Japanese investors are putting
their money on Chief Cabinet Secretary Yoshihide Suga taking
over as Japan's next prime minister, and extending the economic
policies that defined his predecessor's nearly eight years in
office. 
    They are betting Suga, the longtime lieutenant of outgoing
prime minister Shinzo Abe who is stepping down for health
reasons, will be able to secure enough votes among ruling
Liberal Democratic Party (LDP) lawmakers when they hold a
leadership vote on Sept. 14. 
    A Suga government will mean the economic, fiscal and reform
policies of Abe, dubbed "Abenomics", will likely continue.
    Telecom shares fell as Suga has a long-standing position of
wanting to reduce mobile phone tariffs while travel-related
shares soared as he said last week that he wanted to promote
tourism to get the economy back on its feet.
    The Nikkei bounced back and the yen regained some stability
as investors expect Suga to continue policies with a focus on
supporting stock prices.
    "Markets are starting to price in a Suga government. He will
be a successor to Abe's policies and there won't be a political
vacuum," said Takashi Hiroki, chief strategist at Monex
Securities.
    The Nikkei  .N225  rose 1.12% to 23,139.76, wiping out all
of its losses on Friday following the surprise news of Abe's
resignation. The yen also steadied at 105.62 per dollar  JPY= .
    The three mobile phone carriers were among the worst hit on
the Tokyo Stock Exchange. KDDI  9432.T  dropped 4.7% and NTT
Docomo  9437.T  lost 3.4%. SoftBank  9434.T , subsidiary of
SoftBank Group  9984.T , shed 2.7%.
    Some market players also said airlines and railways gained
on hopes of further measures to help revive the economy.
    Suga had told Reuters last week Japan wants to avert another
state of emergency and needs to consider more stimulus to revive
the pandemic-hit economy.  urn:newsml:reuters.com:*:nL4N2FS2QL
    West Japan Railway  9021.T  gained 3.6%, Central Japan
Railway  9022.T  rose 3.3% and ANA Holdings  9202.T  added 2.6%.
    "Suga's stance will be to support the economy as much as
possible while trying to avoid the collapse of the medical
system," said Tetsuro Ii, president of Commons Asset Management.
"It's not that the stock market hugely likes him but he is well
accepted." 
    Suga, who joins the race to take over from the country's
longest-serving prime minister, will likely face off against
former defence minister Shigeru Ishiba, which media polls show
is the most popular choice among the public. urn:newsml:reuters.com:*:nL4N2FX1CN
    But the LDP is likely to use a voting method that limits the
votes from rural party members, domestic media have reported,
effectively blocking Ishiba's path to the prime minister's
office.  urn:newsml:reuters.com:*:nL4N2FW01F
    Analysts say Ishiba, a rare critic of Abe within the LDP,
would likely try to rein in the Bank of Japan's aggressive
monetary easing, which could limit or end the central bank's
exchange traded fund buying programme.
    Japan's Government Pension Investment Fund, the world's
largest, bought more overseas assets during Abe's administration
than it did previously, including boosting purchases of Japanese
equities.
    These purchases could slow if the new prime minister is not
committed to keeping Abe's policies in place, analysts say.
    "Ishiba would try to overhaul Abenomics," said Norihiro
Fujito, chief investment strategist, Mitsubishi UFJ Morgan
Stanley Securities.
    "An Ishiba government is what the markets fear most, but
Ishiba's chances have diminished greatly. As long as someone
like Suga gets the job, policy continuity will calm markets."
    Fumio Kishida, a former foreign minister, and Environment
Minister Shinjiro Koizumi have also been mentioned as possible
successors to Abe, but analysts say neither politician has
enough support to pose a serious challenge.  urn:newsml:reuters.com:*:nL4N2FW08U 
    

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Nikkei 225 and BOJ ETF purchases    https://tmsnrt.rs/2YOBI1e
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 (Additional reporting by Eimi Yamamitsu in Tokyo and Tom
Westbrook in Singapore; Editing by Jacqueline Wong)
 ((hideyuki.sano@thomsonreuters.com; +81 3 4563 2768;))