TOKYO (Reuters) – Japan’s Nikkei fell as much as 2% before recouping some losses and the yen rose on Friday on news that Prime Minister Shinzo Abe was set to resign.[MKTS/GLOB]
A person familiar with the matter said Abe, the nation’s longest serving premier, had decided to step down.
Public broadcaster NHK earlier said Abe, who has battled the disease ulcerative colitis for years, wanted to avoid causing problems for the government due to the worsening of his condition.
Abe was scheduled to hold a news conference at 5:00 p.m. (0800 GMT).
Following are analysts’ comments on the market impact:
TAKESHI MINAMI, CHIEF ECONOMIST, NORINCHUKIN RESEARCH INSTITUTE
“It’s regrettable for him because it means he had to resign over the same issue twice…. The focus at the moment will be on the coronavirus recovery and controlling the infection, regardless of who will be the prime minister.
“There has been talk that Abenomics has been having a harmful impact so I think the focal point will be on suggestions how to make changes to it.
“Of course, Abenomics stood for a weak yen and high stocks so it is unavoidable that markets are showing a response in the opposite direction.
“It’ll be important what kind of vision the person who’ll be the next prime minister will stand for. The market’s direction will likely depend on whether the Abenomics line is followed or corrected.”
JUNICHI ISHIKAWA, SENIOR FOREIGN EXCHANGE STRATEGIST AT IG SECURITIES IN TOKYO
“This is a negative for Japanese stocks because it raises questions about what policies come next. We do see the familiar pattern of falling stocks pushing up the yen, but the important point is U.S. stock futures remain in positive territory, showing sentiment is holding up.”
MOH SIONG SIM, CURRENCY ANALYST, BANK OF SINGAPORE:
“There’s been speculation all week about Abe resigning. There’s some nervousness and concerns because he’s the longest serving prime minister and, with him gone, there could be some uncertainty. Perhaps ‘Abenomics’ is coming to a close. And perhaps we could see some repatriation and this is why the yen has strengthened somewhat.
“I’m not convinced it would have a lasting impact on the yen itself, because if the news is true, whoever the successor is likely to come from the LDP and is likely to be a close ally and therefore policy continuity would still be there.”
DAISUKE KARAKAMA, CHIEF MARKET ECONOMIST AT MIZUHO BANK
“The currency market is stable right now. But for the past month, I have received inquiries from overseas about what would happen if Abe (resigns). These inquiries, they were mostly about worries over the impact on stocks market. What changed the most with the Abe administration was the stock market, with foreign investors buying Japanese stocks. If the Nikkei share average continues to be disturbed, just like it is happening right now, this would mean the yen could strengthen.”
(Reporting by Tom Westbrook in Singapore, Stanley White in Tokyo; Editing by Jacqueline Wong)
