TOKYO -- Investors are piling into shares that stand to benefit from reform proposals of Tokyo Gov. Yuriko Koike, casting their lots with her party in the upcoming metropolitan assembly election as support for Prime Minister Shinzo Abe's scandal-tarnished ruling camp ebbs.
The Nikkei Stock Average added 0.81% to finish Tuesday at 20,230.41 amid gains by companies that could help clean polluted soil, put power lines underground and combat secondhand smoke.
Koike announced Tuesday, after months of delays, that the famed Tsukiji fish market would move to a new site in Tokyo's Toyosu waterfront district as originally planned, pending soil cleanup, and that the original site would be retained and redeveloped. As if to forestall criticism over growing costs, she expressed an intention to "spend wisely." But in the equities market, interest is gathering around likely beneficiaries of her decision.
Campaigning for Tokyo's metropolitan assembly kicks off Friday, with voting set for July 2. Media polls show support building for Koike's Tomin First no Kai party, especially among independents. Gaining a majority would require winning 64 of the assembly's 127 seats. But Tomin First has secured the cooperation of Komeito, the coalition partner of Abe's Liberal Democratic Party at the national level.
"Even without an absolute majority, managing policy should get easier for Gov. Koike" with Komeito on board, said Mutsumi Kagawa of the Rakuten Securities Economic Research Institute.
At an informal gathering Monday of the Japan Investment Advisers Association, presidents of asset management companies were among those speculating a painful metropolitan election for the Abe government. Support for the national government is dropping just as support for Tomin First among voters in Tokyo swells.
More than 70% of respondents to a survey by The Nikkei do not accept the government's explanation for a scandal in which Kake Educational Institution, a school operator run by a friend of Abe, allegedly received special treatment in getting approval for a new veterinary school. The cabinet's disapproval rating climbed 6 percentage points from the previous poll to 42%.
Plunking down their chips
Stock investors, apparently expecting a Tomin First win, are keen on businesses that could benefit from policies advocated by Koike.
Gainers from this included those connected to Koike's pet project of moving Tokyo power lines underground. Ito Yogyo and Haneda Zenith Holdings, which make manholes and concrete pipes, added about 2% Tuesday. Oki Electric Cable racked up a similar gain, extending its rise so far this month to nearly 17%.
Koike's goal of putting out secondhand smoke in time for the 2020 Olympics here has also drawn focus. Tomin First has promised regulations to protect children from secondhand smoke. Duskin, which rents out air purifiers, touched a year-to-date high Tuesday.
Room for debate
This enthusiastic stock-picking may be the flip side of an overall lack of energy in equities. Some believe that all that happened Tuesday was that "institutional investors began to move after missing the buying opportunity created by the yen's slide against the dollar on rising American long-term rates," a securities brokerage trader noted.
"Unless U.S. interest rates start climbing in earnest, money won't shift from bonds to stocks," said Takatoshi Itoshima of Commons Asset Management.
A stable political outlook due to Abe's strong grip on power has been cited as an incentive that has encouraged foreigners to buy Japanese stocks. "If the LDP loses in the metropolitan assembly election, uncertainty in Japan stocks" could follow, an observer at Sompo Japan Nipponkoa Insurance predicted.