BNY Mellon Investment Manager Sees Potential Further Upside from Prime Minister Abe's Program
NEW YORK and LONDON, April 12, 2013— Japan-based exporters, industrial companies selling into the domestic market and regional banks could be among the beneficiaries of the recent moves by the Japanese government to stimulate the economy, according to a white paper from The Boston Company Asset Management (TBC).
The paper, Japan: Assessing the Future of Abenomics, looks at the potential beneficiaries of the policies implemented by the government of Prime Minister Shinzo Abe, which include an expansionary monetary policy, a sizable stimulus package, and an economic growth strategy encompassing deregulation and structural reforms.
"While the weakening yen already is benefitting exporters, they could do even better if Prime Minister Abe can successfully integrate Japan into the Trans-Pacific Partnership (TPP), a free trade pact with other Asian countries, the U.S. and other countries in the Americas," said William J. Adams, portfolio strategist for TBC and the report's author. "Inclusion in the TPP would indicate willingness to open parts of Japan's economy, such as agriculture, to global competition."
The prime minister's program could benefit domestic-oriented companies in the industrial segment as they benefit from the appreciation of their property assets and future development opportunities, the report said. Regional banks could benefit from increasing lending and consolidation synergies if more aggressive reforms pass the Japanese Diet, according to the report.
In addition, the report said some retailers could benefit from the ability to pass on the effects of higher prices in an economy experiencing moderate wage inflation.
"Investors will have various signals over the next year to see if significant reform will be introduced in Japan that could promote improved growth prospects," said Adams. "For example, joining the TPP would indicate that Japan's views on free trade have changed for the better and provide an additional boost to exporters facing international trade barriers."
The Boston Company Asset Management, LLC, a BNY Mellon Investment Management boutique, provides investment management services for corporate, public, mutual funds and union sponsored and jointly trusteed retirement plans, endowments and foundations. Assets are managed by The Boston Company as well as its personnel acting as dual officers of either The Dreyfus Corporation or The Bank of New York Mellon.
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