October 23, 2017 9:32 am JST  (Updated October 23, 2017 7:24 pm JST)

Japan election pushes Nikkei 225 to record 15th consecutive gain

PM Abe's supermajority victory likely means continued monetary easing

SHOTARO TANI, Nikkei staff writer

The Nikkei 225 average recorded its 15th consecutive gain on Monday. (Photo by Maho Kohata)

TOKYO -- The Nikkei 225 stock average achieved its longest winning streak ever, pushed along by Prime Minister Shinzo Abe's landslide victory in Japan's lower house election.

The Nikkei average ended Monday's trading up 239.01 points, or 1.11%, to 21,696.65 yen. The prime minister's ruling Liberal Democratic party-led coalition secured a two-thirds parliamentary supermajority in Sunday's election, boosting investor confidence that the aggressive monetary easing by the Bank of Japan, part of the prime minister's signature "Abenomics," will continue for the foreseeable future and will send stock prices even higher.

This is the Nikkei average's 15th consecutive trading day of gains -- the longest since the Tokyo Stock Exchange started compiling the initial index in 1950. Economically sensitive stocks in sectors such as electric appliances, iron and steel, and machinery led the rise. Eyes are now set on the next benchmark of 22,666 -- a high reached in 1996 during the recovery from the bursting asset bubble.

"The focus will be on foreign investors," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management, in a report. Ichikawa noted that because foreign investors net sold Japanese stocks last year, they still have capacity to buy. "If the financial results for Japanese companies for the April-September period are confirmed to be good, then there is expectation that they will purchase even more Japanese stocks."

Abe's resounding victory and the perceived continuation of aggressive BOJ easing also pushed the Japanese yen lower against the U.S. dollar. The currency fell as much as 0.5% compared to Tokyo's close on Friday, to around 114 yen per dollar in early Monday trading in Asia. This marks the lowest rate in three months.

The weaker yen is also a boon for stocks ahead of the earnings season, as it raises investor expectation for better results from Japanese exporters.

CEOs react

Abe's administration is seen as a business friendly, and CEOs from a number of Japanese companies have expressed their sentiments regarding the election outcome.

Akiyoshi Koji, president of Asahi Group Holdings, released a statement saying he hopes the new government will "eliminate the public's feeling of uncertainty about the future," and wants the government to make revitalizing private consumption "a top priority."

Kirin Holdings Company CEO Yoshinori Isozaki echoed Koji's views. "In addition to the current growth strategy, [the government should] concretely advance economic policies that are directly linked to people's everyday lives," he said. "At the same time, the government will need to reform social security and tax together to revitalize the Japanese economy, and move ahead with structural reform, expenditure reduction and fiscal consolidation."

Kirin Holdings Co., Ltd.

Japan

Market(Ticker): TKS(2503)
Sector:
Industry:
Consumer Non-Durables
Beverages: Alcoholic
Market cap(USD): 21,648.86M
Shares: 914M

Asahi Group Holdings Ltd.

Japan

Market(Ticker): TKS(2502)
Sector:
Industry:
Consumer Non-Durables
Beverages: Alcoholic
Market cap(USD): 23,843.23M
Shares: 483.58M

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